Board to sign tripartite escrow agreement with SBI and REC
The rate of interest will be 9.5 per cent and KSEBL has an option to settle the loan amount through bullet repayment, meaning that the loan can be repaid in one go at the end of the loan period instead of repaying through instalments.
REC Ltd, formerly Rural Electrification Ltd, is a public infrastructure finance company in India’s power sector and its mandate is to finance and promote rural electrification projects across India
KSEBL said that the loan has been sanctioned with Ujjwal DISCOM Assurance Yojana (UDAY limits). The Cabinet Committee on Economic Affairs (CCEA) had earlier come up with an approval of one-time relaxation of the borrowing limits for the state government-owned Discoms.
KSEBL said the loan is being availed to meet the working capital requirements of the board. KSEBL needs to provide suitable escrow cover for the entire loan amount of Rs500 crore as part of the terms of loan.
The loan terms allow REC to periodically reduce or enhance the rate of interest in respect of loan instalments not disbursed up to the date of such revision.
“The revision in the rate of interest shall take effect from such date as may be notified by REC. An additional interest at the rate as per prevailing policy of REC shall be charged in addition to the normal Interest for the period of non-creation of specified securities within stipulated period,” KSEBL further explained.
KSEBL needs to furnish a certificate that outstanding working capital loans and sanctioned-but-not-disbursed working capital loans as on date from banks/ FIs (including proposed loan), do not exceed the maximum ceiling of 25 per cent of the previous year annual revenue as per UDAY norms.
The board is also required to enter into a Tripartite Escrow Agreement among KSEBL, State Bank of India (SBI) and REC Ltd for providing default Escrow cover.