State-owned Non-Banking Financial Companies, Power Finance Corporation (PFC), and REC Limited have reduced their lending rates across all types of loans by 40 base points (bps).
For the unversed, one basis point is equal to 1/100th of 1%, or 0.01%, and is used to denote the percentage change in a financial instrument.
A base point is a common unit of measuring interest rates and other percentages in finance.
Union Minister for Power Shri R.K. Singh expressed satisfaction at the continued efforts by both public sector undertakings to reduce rates and remain competitive.
He said that continued reduction of lending rates by REC and PFC will help Power Utilities to borrow at competitive rates and invest in improving the power sector infrastructure, thereby benefitting the consumer by way of reliable and cheap power.
In the last about one year, both the organizations have reduced lending rates cumulatively by up to 3%.
In order to give a boost to Renewable Energy, where long-term funding is required, the rates have been revised to as low as 8.25%.
The reduction in rates has been possible due to the lower cost of borrowings by these organizations, in the past year or so.
It is pertinent to note that PFC and REC are already providing short-term loans at interest rates as low as 6.25%.
