New Delhi, Feb 9: Government-owned Rural Electrification Corporation (REC) plans to raise about $200 million from export credit Agencies (ECAs) in overseas markets for power equipment financing. This is over and above the $500 million it plans to raise through external commercial borrowings.

HD Khunteta, director-finance, REC told reporters, "We have submitted to RBI an application to raise $200 million, which will be used against import of power equipment." Power companies would be buying equipment on loan from REC, which would in turn raise money from foreign banks, he said.

The government had last year imposed restrictions on ECBs - a move that has affected the overseas fund raising by infrastructure companies.

"We are in talks with RBI to convince them," Khunteta said. Claiming that the central bank had raised concerns with regard to rupee appreciation, he said REC could take advantage of the interest rate cut in the US.

REC also proposes to issue secured non-convertible non-cumulative redeemable taxable bonds in the nature of debentures of Rs 500 crore with a green shoe option of Rs 1,000 crore.

"The bonds will carry a 9.07% interest rate for a tenure of 10 years," he said. Khunteta said they were in talks with a host of foreign banks

including BNP Paribas and ABN Ambro.

REC plans to diversify its lending portfolio and offer short-term loan of up to one year and medium-term loans of one to five years to manufacturers of equipment or materials. "To be eligible to receive these loans, the equipment manufacturers must have been awarded a firm order for executing contract in power projects in India by power utilities," it said in the prospectus for its initial public offer