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PTC India Financial Services said on Monday the company has entered into arrangements with scheduled commercial banks whereby the banks will issue letters of credit to project companies in the renewable energy space.
These letters of credit will be issued on the basis of letters of comfort issued by PFS and due diligence on ‘certain parameters’, the company said in a statement.
“Currently, such project companies are required to approach banks and negotiate the associated costs for issuance of letter of credit, which generally takes 3 to 5 months. Under the new arrangement, a letter of credit can be opened in a much shorter time on a case-to-case basis and project companies would not be required to separately pursue their case with each bank,” the statement added.
Ashok Haldia, Managing Director and Chief Executive Officer of PTC India Financial Services, added that the move is an innovative financing instrument whereby renewable energy projects financed by PFS may not be required to approach individual banks for their non-fund based financial requirements.
“This is expected to be a great relief for renewable energy projects which have a low gestation period and will help developers focus on project execution,” Haldia added.
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