54EC bonds and Koradi sub-9% thermal rate debate vanished.

I have two questions. First is, thank you for sharing that the ex of prepayments, the loan book growth could have been at 18%. I wanted to understand that the repayment rate being elevated is very much a function of those RBPF loans that we had given out, which will continue for another year. So what is our outlook on disbursal growth? It was 18% this year. What would it be in FY '26? How elevated do we expect the repayments -- prepayments to be and, thus, where our growth outlook would be? That's my first question. My second question is on the renewable energy projects. We have been hearing of the PPAs not getting signed and there's been a slowdown with the DISCOMs, etcetera. What is an update over there? Has there been some intervention to smoothen the process? If you can give some color on that. And sorry, one more question, third question is, if I see your Stage 1 and 2 provision coverage ratio, while it has been increased on the DISCOM book that was expected, it has also been increased on the private renewable book as well. That used to be about 60 bps in December '24, that has been raised to 132 bps. So can you help us understand, is there any stress or any reason to be concerned about the private renewable book that we've raised the Stage 1 and 2 PCR over there?

Yes, Shreya, that is regarding the repayment and the disbursements, as you know, that REC has given an exponential growth as far as the disbursements are concerned. It has increased from INR90,000 crores to INR1,50,000 crores and then to INR1,91,000 crores. And this year, again, we are expecting, provided the market conditions are there, then we are expecting that our disbursement should touch around INR2 lakhs to INR2,10,000 crores during the year itself. As regards to prepayments, that will continue to be on the same lines, and we expect that approximately INR1 lakh crore of repayments generally becomes due in the year, and it will be on the same trend. Regarding the prepayments, yes, this year, we have received the prepayments of around INR34,000 crores, of which around INR22,000 crores were from the RBPF, in which the scheme itself states that anyone having the surplus of the money can repay the amount and that, again, they can take the disbursement. So the disbursement and the prepayments both are flowing in the same way. Similarly, sum of around INR12,000 crores have been prepaid by some of the agencies. Yes, those prepayments were there, and some of them were expected and some of them were not anticipated. And out of this which that Adani has made the prepayment of around INR1,800 crores, which were mainly because of some exposure issues were there. They have taken the further exposure from REC by prepaying this debt. Similarly, ACME has prepaid the amount that was the mandate given through their public issue, which they raised during the year itself. As per their prospectus, they had to prepay the amount. And once they raised the money from the market, they prepaid the amount. Yes, MSEDCL has made the payment of around INR3,700 crores. That was perhaps they have made some other arrangements have been made. You will understand that REC is a financial institution. Prepayments and the repayments are a regular phenomena. Anyone who understand and who knows that they can get cheaper funds from the market, they used to do the same thing. What we are doing as far as my borrowings are concerned, during the year itself, I have made the prepayment of around INR17,000 crores to my bankers, where my borrowing rate was higher. And I have replenished the same with a lower cost of funding. So this is a regular phenomena. I think we should not be afraid from these kind of things to happen. But yes, my policies are there not to encourage any kind of prepayments are there. That policy are still there. Vijay Kumar Singh: With regard to your renewable PPA not getting signed, the query was regarding that. So as far as REC is concerned, we are taking up only those projects for funding which have already signed PPA. So PPA not signed is not a risk to REC. But yes, there are issues in terms of signing of PPA. The renewable energy implementing agencies, NTPC, NHPC, SJVN and SECI, they have conducted bidding. And we understand that close to 40, 50 gigawatt of bidding concluded in the last year needs PPA to be signed with the DISCOMs. And I think this is an ongoing process. Sometimes it does take time in the distribution companies to come forward and sign the PPA. Every DISCOM has a defined renewable purchase obligation. So sooner or later, we have seen in the past also sometime, this gets accumulated and the number looks elevated. But I think in due course of time, things get sorted out. So that is something which list to the sector. But again, let me say this one more time that we take up funding of a project only when the PPA is signed, so as such, no risk in our book. Harsh Baweja: You have asked about the private sector increase in the ECL. That was on the trend and no new NPA has happened, except the Bhavnagar, which happened in the Q3 of FY '25. And that was a very insignificant amount that out of total loan book of INR5,66,000 crores, that is around only INR13 crores. And for that, we have already started the resolution process, and we have filed a case in the NCLT. And perhaps we expect that in the next 2 quarters, that will be resolved. The account which have elevated the provisioning in the private sector, that was mainly of the Alaknanda. There, some of the rating of the company and the promoter was degraded from B to C, and C- has attracted the extra provision. So because of that and similarly, one of the project, which was in the public sector that has been bought by some private sector company, that is the Teesta Urja. So on that, we have to make the higher provisioning of that. Rest all, absolutely on the track. Nothing extraordinary things has happened as far as the private sector provisionings are concerned.

Got it, sir. So just one follow-up. So the disbursal number that you have given and expectation of elevated repayments, does -- it looks like we will only be able to do about 12%, 15% growth next year also, right, AUM growth?

Yes, we expect so. It should be around 12%, plus/minus 1% or 2%, you can take it up. And you can understand that we have given you target of around INR10 lakh crore loan book by 2030. So somewhere, it may be 11%; somewhere, it may be 13% in the years to come. But if we take average growth of 12%, then it should touch INR10 lakh crore by the year 2030. It's, in fact, what we had given the guidance earlier.

So first thing, just trying to understand, out of these 12 projects that we now have under NPA, I mean, have we shared some projects which are in advanced stages of resolution and which could potentially get resolved in this year? Why I ask is during your opening remarks, you also shared the fact that we would look to get to net zero NPA by the end of this fiscal year. So if you could just help us understand some of the projects which are in advanced stages of resolution, and what is the progress in each of those projects?

Sir, as regards to the NPA assets, you know that at the beginning of the FY '25, that is on 1st April '24, there were 16 projects which were to be resolved. Out of them, we have resolved 5 projects in the year '24-'25, that is Nagai, KSK, Lynx, Amarkantak and Corporate Power. There, we have a recovery of around 71%. 1 more project had been added, which I have just mentioned about the Bhavnagar. So 11 plus 1 became 12. So 12 projects are to be resolved, and we are sure that these projects will be resolved by the end of Q4 '26, of which the major projects are Sinar project, second is Hiranmaye project, third is Bhadreshwar and the fourth is TRN. So out of that, if you see that we have already filed IBC case in respect of the 6 projects. And one is under restructuring, that is TRN, and 5 are already in technical write-off where we have already made a provision of 100%. So we can expect a good amount of recovery out of the projects which are under the IBC, that is the Sinar, Hiranmaye and one more project, Bhadreshwar project is there. There, we can expect a good recovery. So I am expecting that around INR800 crores to INR1,000 crores will be recovered in the FY '25-'26.

Got it, sir. And sir, the other thing I wanted to understand is while we've spoken a lot about these prepayments and the fact that some of these happened in the normal course, but in a declining rate environment, I think banks will be much more aggressive in kind of trying to get some of these projects that you have financed today. So I mean, what are we trying to do around it? Basically, I think you spoke about some retention schemes or retention policies that you have in place. But I mean, beyond the RBPF, I think in a declining rate environment, otherwise also, there is going to be that pressure which will be there on the rundown in the book, the prepayments. So what are we kind of trying to do to address that? And the last question that I had was again on the RE side. Sir, obviously, I mean I think Gensol was a one-off example of maybe misgovernance. But just trying to understand, on the RE side, how are you looking at things? Is there a case to believe that maybe in the next 12 to 18 months, we could see more such issues coming out of the RE sector? And sir, I also explain why I am kind of questioning that, in the past, whenever we spoke about stressed assets in the thermal sector, we have always prided that there were no stressed assets in the state sector. Large part of it were in private. But if you look at the RE side today, right, large part of the financing that has happened on the RE side is predominantly private in nature. So what are your views on the RE financing and how asset quality could evolve over the next 12 to 18 months?

Yes. Thanks for the intervention. I'll just -- yes, I would like to appreciate that you have rightly pointed out that we are in a declining rate environment. And the high interest rates that one could normally charge in the earlier years are no longer available. We must also realize that the liquidity scenario in the economy has loosened up further with the repo rates coming down. I think we can expect interest rates to only go southwards. Having said this, we are very conscious of the fact that we have been fundamentally involved in the power sector for a long time. We have unique capabilities and unique perspectives with regard to the power sector. Fundamentally, we are looking at 3 or 4 major interventions. Number one, we are really going to incentivize the construction part of the project finance. As on date, generally there are no incentives in place for any player, whether it is a state player or a private player, to incentivize early completion of projects. So that is one area which we hope to target in the days to come. The second is the option of refinancing. The option of refinancing, once scheduled, COD has been achieved. That is another option that we are looking at. We are also looking at streamlining and liberalizing the ease of doing business with respect to our guidelines. I think a combination of all these 3 parameters will make an interest rate reduction an irrelevant consideration. I'm hopeful that once our guidelines have been further liberalized, once our incentive mechanisms have been put in place, people are not going to look at interest rate advantages. Rather, they will look at ease of doing business because as we know, there are a lot of imponderables in the power sector, and there are a lot of risks in the power sector with regard to project completion, the nature of constructions, the huge investment involved, the various risk factors which sometimes one cannot plan for. I think REC is uniquely placed with its past profile, with its expert entity appraisal process, I think the interest rate consideration may not be very relevant in the year to come. Harsh Baweja: As regards to RE sector, you will appreciate that our rates are already most competitive rates in the market and in all the segments, that is whether generation, transmission and distribution are concerned. So since we have a competition with directly with the banks, so our rates are already competitive. And there, we have the policy also that we give a post-construction, post-completion discounts also. And perhaps we are yet to see a phase where our projects are being refinanced by the banks. So that case is still not coming to us. But yes, we are keeping ourselves ready for the threats in the near future also. So we'll continue to keep our rate of interest competitive. Similarly, that to supplement that, how to meet this lower declining interest rate scenario, we are also focusing on the low-cost raising the funds. Recently, we have raised the institutional bonds at 6.86%, which is the cheapest source of funds available in the domestic market currently. And we could raise the funds at cheaper rate as compared to our peer companies, that is HUDCO and PFC and all that. So we are focusing on that. Similarly, as regards the why one should come to REC, there is a sectoral limits where the banks have the limitations. Banks have to fund to all the sectors. So there, they have the sectoral limits, so they cannot go beyond that limit for the power sector. Like REC, since we have been in this business for the last 50 years or so, we have offices in almost all the states. There, we have the direct connect with the borrowers. So those borrowers, they understand our system, we understand their systems. Our services are much better in servicing to all, whether be it the renewable sector or the state sector. So there, we have the upper edge. And that is why we get continuous business, and that is why our sanction and the disbursements growth are happening for the last 4 to 5 years.

So a couple of questions. First one on AUM growth. So as you rightly said, I mean, these prepayments are part and parcel of the business. Now if we were to look at in this backdrop, the biggest drag right now in AUM growth is distribution-led asset. Now here, my question is that, okay, considering all the schemes, some picking up, some maturing, how do you see this -- the distribution-led AUM to grow? Because last year, it had grown at 2-odd percent only. So how do you see over, say, next 1 to 3 years, how this distribution-led asset will grow eventually, I mean, if the RDSS were to pick up, PMC, so most of it was not to pick and some schemes were to mature? And related to that, coming to thermal, thermal has done okay last year, I mean, despite some resolution impact of 3%, it has grown at 8%. Now if we were to look at the NEP 2032, now the idea is 95 gigawatts of thermal, out of that probably 35, 40 gigawatts will come from a state. Now given that gestation period of nearly 6 years for thermal project, more or less, if we are really serious about this 95 gigawatts, the planning to execution should start in the next 1, 2 years. Now in that context, can you give idea that, okay, which are the state utilities who is going to contribute a large part of this 35, 40 gigawatt that is going to come in the state sector? And what is the kind of visibility here because the thermal growth will again be key for your renewables particularly? Second, when it comes to your profitability, I mean, some of the projects there will be -- I mean, the interest rate is declining. And also, there have been some noise around your estate-related project, you charging higher interest like a Kaleshwaram project. And once those kind of rate negotiations happen, probably there will be some pressure on your NIMs. And also this credit cost will start to see a more normal as we go past this recovery phase. So how do you see kind of your NIMs and ROAs to be kind of trending, say, after FY '26?

So I think on your first question regarding the distribution-led repayments, let me clarify that particularly in this year, we have seen that there are certain repayments, which are actually not expected because in some of the case, the state governments, and we are seeing this trend for the last 1, 2, 3 years, the state governments are now supporting DISCOMs. And this particular support comes in the year-end. So February, March is the time when such support comes. Now in case of, say, for example, Chhattisgarh received some state support, close to INR2,000 crores, and then they made that particular repayment using that because otherwise, it doesn't make sense for them to keep the money idle at their end. So such repayments have also happened. Let me be very specific that in our distribution segment, other than RBPF, there is nothing else which is actually making these repayment things happen. RBPF, the product itself is designed in a way that there is a facility available to the borrowers in which they can make prepayment at any point of time. But we are seeing that regular disbursements and repayments are happening, apart from some INR5,000 crores to INR10,000 crores, which is happening particularly in this particular year. Thermal in the state sector, you know that central sector like NTPC, NHPC, they raise funds for their projects on their own. But the state sector, we are the key financiers for them. And we are looking at this generation sector very, very closely. So wherever the project is ripe and needs financial closure, we have done the sanction. We have done sanction in case of Haryana; Rajasthan, 2 projects; Haryana, 1 project; MP, 2 projects; Maharashtra, 1 project; DVC, we have done 2 projects. Likewise, whichever project is available and needs financial closure, we have given the sanction, and there are some issues around terms and condition interstate. That discussion is undergoing currently. So we are going to target this particular state generation sector very, very aggressively. Harsh Baweja: Yes. I'll supplement to what Vijay sir had just mentioned, that there are some other projects like the Bihar is coming with 2,400 megawatt project. MP is coming with a 3,200 megawatt project. Similarly, in the private sector, if you see, that Lanco has been won by the Adani. So there may be some expectation that Mahan is going for the expansion. JSW is going for the West Bengal expansion, that is 1,600 megawatts. Essar Power is going for the 1,600 megawatts. Similarly, in the transmission projects, if you see the TBCB projects, there is an ample opportunity around INR1.1 lakh crore business to come in the next 2 to 3 years. And in the last year itself, RECPDCL and PFC subsidiary have sanctioned 45 TBCB projects of around INR55,000 crores, so of which we expect that the major chunk will come to REC. And similarly, there is a smart meter project scheme, 11 crore smart meter projects have been awarded to various MISP agencies. And that cost around INR45,000 crores to INR50,000 crores, of which we are expecting that a good amount of business will come. So that will keep our book growing at the same pace at which we are anticipating. As regards to the NIM and this spread, that our NIM is at present 3.63%. And we have already mentioned that it will be between the 3.5% to 3.75%. Similarly, the spread, that would be between 2.75% to 3%. So we'll continue to maintain. We have already mentioned that we are resorting to some of the cheapest cost of borrowing. And our Board itself is competent or authorized to fix the interest rates. So our card rate is fixed by the Board itself. So keeping the margin intact, we fix the price and that need to be competitive. As you know that in the next 5 to 7 years, 80-gigawatt generation capacity is to be added. And there, we get the best of the yield. Our generation interest rate as of now is 10% to 11.5%. So that will contribute to the growth and to the NIM also. Similarly, infrastructure project may also contribute to the NIM and the spread also. So these are our strategy on which we'll work.

First question is on the Telangana state exposures. I see that you have an exposure to the Kaleshwaram project, another power generation company and another power distribution company. Which of these are in NPA or SMA today? And any other Telangana state accounts which are in SMA or NPA apart from these 3?

Sir, Kaleshwaram and TSWRIDC, both are in the Stage 2 assets and are standard. Some of the AP DISCOMs are in Stage 2. You know that somewhere there may be some administrative delays. You know the working of the government and sometimes they don't get allocations from the center on time, and some budgetary supports are also delayed. And that is why they have slipped from Stage 1 to Stage 2. And wherever they have slipped to Stage 2 or the delays are there, we have been charging delayed and penal interest from these assets. They have been regularly making the payments and we don't foresee any kind of difficulty in realizing our debt.

Okay. And any status on the resolution of these exposures? Can there be a haircut here? And any plans to consolidate these exposures with a few lenders?

We don't think so that it will be in the same fashion and the style in which it has been going, I don't think that we are going to restructure these loans or there should be any haircuts on these loans and these are secured against the government guarantee also. No plans to consolidate them.

So I'm again dismantling the growth levers, both on the thermal and the distribution side. A few things might be repetitive. So on the thermal side, while there is no second thoughts about the funding opportunity, especially also given the fact that greenfield projects have become costlier, but the problem is about the implementation and the execution delays. So when do you see thermal coal generation disbursements sort of coming to us in a manner that it would drive the loan growth for us? Point number one. Second, on the renewables side, again, you mentioned and touched upon the interest rates, and that's fairly known. But now there is question about quality of renewable projects that are coming to fall. So while state exposure has decreased, there has been growing number of private sector renewable projects, 1 or 2 we already have seen sort of hitting the bottom. So on the renewables side, have things changed for you in terms of being selective or on the underwriting side, that's part of renewables? Third, on the distribution side, so while RBPF has been holding up our loan growth, so in Q4, the sanctions towards RBPF were huge. Now is this a Q4 phenomenon? Or this is something like, okay, look, now RBPF is completely behind. And now that the implementation of government capex is picking up, so RDSS disbursements on the distribution capex side will sort of pick up on a larger scale in '26 vis-a-vis FY '25. Also on the distribution side, because RDSS and LPS are towards their sunset clause year, so will we see tapering of disbursements from the distribution side going forward beyond FY '26-'27? And therefore, finally, what are the levels to this 12% to 13% growth? Yes, that's all from my side.

With regard to thermal growth, we mentioned earlier that we have already sanctioned multiple projects, which were available for financial closure. And then our final discussions are going on. In fact, you know this that states implement project only after they finalize major projects. Major projects means BTG projects and balance of plant projects. And then only they take up the initial site activity also in which the funding starts. All these projects have been sanctioned in the past 1 - 1.5 years. And then in majority of the projects, now the EPC is almost decided, and we are also at the verge to finalize the terms and conditions to get going on these projects. We still have left a number of projects and particularly in the joint sector where we still have not started funding because the budgets are still not ripe enough. Those projects will also come our way and joint sector with central sector agencies and state sector. Normally, if you have seen in the past that these projects, the central sector companies do not expose their own balance sheet, rather, they rely on the balance sheet of the JV company. And those JV companies, traditionally, they also avail loan from institutions like us. So that also is going to be a mega opportunity for us in times to come. Thermal, as I mentioned, that now since majority of EPC contracts and the major contracts are getting concluded, and we believe that in this current financial year, there will be substantial growth in terms of disbursement, capex disbursement in thermal segment. Regarding renewable energy projects, of course, interest rates are so competitive. I mean, we can compete with any bank in this particular segment. And therefore, you might have seen that we have done a large number of project sanctions. In the past year, we did INR1,35,000 crores. This year, we did INR1,07,000 crores. In the current year, we are targeting close to INR1,50,000 crores of sanctions. And earlier sanctions are now converting into disbursements also. We have been saying this that we are very, very particular about the quality of asset. And as I said, that we take up the project for funding only when the PPA is signed, not alone PPA, but there are other critical factors like open access is also one of the major issue which causes financial stress in the early stage of the RE project. So we are very, very critical that all the critical things are available to the project like PPA, open access, evacuation system, then only we take up the project for funding. The stress that you are talking about in the RE is about 2 very small projects. One is for 1 megawatt; another is, I think, 5-7 megawatts. And these were sanctions maybe some 10/12/15 years back. And they traditionally had the issue of PPA, realization of some tariff-related issue also and realization of revenue and therefore, they become NPA. Other than those, everything else is actually going on very well, and we are actually witnessing that the credit rating of these assets is also improving. You know that we now have LPS in place. And therefore, no project is actually seeing the delay in receivables. These are on time, and therefore, there's a remarkable improvement in the credit ratings. Regarding disbursement in the distribution segment, LPS got over maybe 2/3 years back. RBPF sanctions, you mentioned that Q4, there's no sanction. In fact, in RBPF one sanction is actually valid for 5 years, so whatever sanctions we did maybe two years back, it is still valid for another three years. What we sanctioned last year is still valid for next 4 years, likewise. So RBPF sanction is not an issue. We are targeting RBPF disbursement close to INR80,000 crores to INR90,000 crores in the current financial year. And the capex-led disbursement will definitely improve this financial year because RDSS, the grant component is also almost getting over. And now the states will actually be required to put the balance 40% as 60% is grant, which is now almost coming to the end. The balance 40% is the opportunity available to us and we have sanctioned a large number of projects for counterpart funding. So those disbursements will also kick in very soon. And I think we would start seeing them in maybe Q1 itself and certainly in Q2.

Just sir, firstly, on the competition bit, you mentioned that you have not seen too many balance transfers in this quarter. So fair to assume that the prepayments in the renewables segment, in the transmission segment that we have deemed this quarter, there is no asset balance transfer or refinancing to a PSU bank. It is just prepayments, like that is the first one. And second, what is the interest rate differential basically between -- let's say, we are charging somewhere between 8.5% to 9% for a renewable project, what is the public sector bank charging for the same project, assuming a similar credit rating and everything?

So in RE, there were some repayments, and we got those repayments in the last quarter. So we were aware that this will happen back in May and like Adani, we expected a few because those repayments were lined up, and we knew that they will come up in Q4 itself. In Q1, as we see, there is no repayment visible as of now and we believe that the interest rate that we are offering particularly to RE sector will be good enough to retain the assets with us. With regard to our interest rate, we have been saying that we are very competitive. In the state sector, we have done some projects even at 8.5%. But generally, our interest rate starts from 8.95%. And in private sector, it starts from 9.2% and goes up in a step of 25 bps. Other banks are also offering in the same range, maybe 10/ 20/ 30 bps here and there. But if you have seen the sanction number of INR1,07,000 crores, that means the developers are interested to get financing from REC and therefore, the interest rate that we are offering is workable for them. So therefore, we say that our interest rates are quite competitive. Nothing of this thing is visible at this point of time. So nothing will happen in Q1 at least.

The 87% is state loans. Are they entirely backed by the state government guarantees?

No, sir, almost 50% of that is backed by the state government guarantees. That is against the hypothecation of the assets, sir. But 90% plus loans against the non capex are state government guaranteed. Out of my entire portfolio of the government funding, 50% is secured against the government guarantee. And as far as the non-capex loans are concerned, more than 90% are guaranteed by the state government.

Sir, second question, in the earlier point, you were talking about external commercial borrowing and foreign currency loans. Are they completely hedged both for foreign currency risk and also for the interest rate risk?

Our 99.9% portfolio is hedged, and the hedging is as per the RBI approved structure only.