REC Board to Consider ₹1.5 Lakh Crore Borrowing Plan for FY27

Introduction

State-owned REC Ltd has scheduled a Board of Directors meeting for March 25, 2026, to consider and approve its market borrowing programme for the financial year 2026-27. According to sources within the company, the power sector lender is likely to propose a borrowing target of ₹1.5 lakh crore for the upcoming fiscal year. This marks a reduction from the amounts approved in the preceding years, signaling a strategic shift influenced by the company's strong capital position and prevailing market conditions.

Proposed Borrowing for FY27

The proposed borrowing figure of ₹1.5 lakh crore for FY27 is ₹20,000 crore lower than the ₹1.7 lakh crore approved for the current financial year, FY26. A senior company official, speaking on condition of anonymity, stated that the decision to trim the borrowing target stems from a healthy capital base and volatility in market interest rates. The non-banking financial company (NBFC) also intends to proceed cautiously with external commercial borrowings (ECBs) in the next fiscal year, citing the current geopolitical landscape as a key factor.

Prudent Approach to Fundraising

Despite seeking approval for a significant sum, the actual funds raised are expected to be considerably lower. The official clarified that the company's strategy involves securing a higher limit to maintain flexibility, while the actual borrowing is dictated by market conditions, particularly coupon rates. "We will take approval for about ₹1.50 trillion, but may keep the borrowing for the year limited to ₹750 billion–₹800 billion," the official noted. This approach is consistent with the company's recent practices, where actual borrowing has been substantially less than the approved limit.

Historical Borrowing Trends

To understand the context of the FY27 proposal, it is useful to look at REC's borrowing patterns in recent years. For the financial year 2025-26, the board had approved a borrowing plan of ₹1.7 lakh crore. However, as of early 2026, the company had only raised around ₹800 billion of this amount. The official projected that the total borrowing for FY26 would likely not exceed ₹900 billion. Similarly, for FY25, the board initially approved a borrowing programme of ₹1.6 lakh crore, which was later revised upwards to ₹1.8 lakh crore to accommodate funding needs.

Breakdown of Funding Instruments

The company utilizes a diverse range of instruments for its fundraising activities. The ₹1.7 lakh crore plan for FY26, for instance, included raising ₹1.55 lakh crore through a mix of domestic bonds, capital gain tax-exempt bonds, Rupee term loans from banks and financial institutions, and ECBs. The remaining amount was planned to be raised via ₹10,000 crore in short-term loans and ₹5,000 crore through commercial papers. A similar diversified approach is expected for the FY27 borrowing programme, depending on market appetite and cost-effectiveness.

Overall Financial Framework

While the annual borrowing programme is subject to change, REC operates within a larger financial framework approved by its board. The company's overall borrowing limit in Indian Rupees is capped at ₹6 lakh crore. In a move to enhance its global fundraising capabilities, the board recently approved an increase in its foreign currency borrowing limit from USD 20 billion to USD 24 billion. This provides REC with greater access to international capital markets when conditions are favorable.

Strategic Focus on Private Sector Lending

Beyond its borrowing activities, REC is also undergoing a strategic shift in its lending portfolio. The company aims to increase its exposure to the private sector. Vivek Kumar Dewangan, Chairman and Managing Director of REC Ltd, recently highlighted this goal, stating that the share of private sector lending, which currently stands at 12%, is projected to gradually increase to 30% by the end of 2030. This diversification is part of the company's long-term strategy to balance its loan book and tap into new growth areas within the power and infrastructure sectors.

Conclusion

The upcoming board meeting on March 25, 2026, will formalize REC's borrowing strategy for the next financial year. The proposed reduction to ₹1.5 lakh crore reflects a prudent and adaptive approach to capital management. By aligning its fundraising with market realities and maintaining a strong capital base, REC aims to navigate economic uncertainties while continuing to fund India's power and infrastructure development. Investors and market participants will be watching for the board's final decision and any accompanying commentary on the company's outlook.