Rural Electrification Corporation (REC), the state-run lender to the power sector, has said its loan sanctions for the next fiscal beginning April 1 may be lower than the current financial year's projections due to slowing down of projects.

"We expect to sanction loans worth Rs 36,000 crore in the next fiscal, against the sanctioning target of Rs 40,000 crore in the current fiscal," REC's director (finance) H D Khunteta said on Wednesday.

The loan sanctions depend upon the equity available for establishing such projects, Khunteta said. "Unless companies undertaking projects bring in equity, we can't fund projects," he said.

The lender, with a mandate to fund power generation projects, has sanctioned loans worth Rs 37,000 crore till February in 2008-09, he said.

About 10% of REC's loan sanctions during the current fiscal are for private sector projects.

"Loans disbursed to the private sector are at about 6% of our total outstanding," Khunteta said, adding that the proportion may rise to 15% by the end of March 2011.

The company expects to raise Rs 28,000 crore in the next fiscal, almost 75% more than the Rs 16,000 crore it plans to raise in the current fiscal, to on-lend it to power projects, Khunteta said.

Shaleen Agrawal / DNA-Daily News & Analysis Source: 3D Syndication