The loan amount would be used by PFC to fund the requirements of various power utilities in the country, corporation sources said.

PFC would pay back the loan amount by bullet repayment in lumpsum at the end of seven years from the date of availing the loan, the sources said.

The Corporation would have to pay an interst of 25 basis points to IOB, less than the bank's prime lending rate of 13 per cent every year, they said.

PFC, the premier financial institution catering exclusively to needs of various power utiltities, has targetted a resource mobilisation of about Rs 1,850 crore during the current financial year.

The sources said, the corporation for the year 1998-99 had also targetted a total disbursal of about Rs 1,800 crore out of which PFC had alreadydisbursed Rs 1,707 crore till January 1999.

PFC, till December-end, has raised about Rs 305.50 crore through bonds, Rs 260 crore through term loans, Rs 150 crore by government loans and about Rs 614.28 crore through internal resources.

The Corporation, which had targetted total loan sanctions of Rs 2,400 crore for the current fiscal had registered a net profit of about Rs 584 crore during the first nine month period of 1998, the sources said.

PFC, which is yet to decide on its maiden public bond issue of Rs 600 crore had recently floated unsecured bonds for Rs 100 crore for private placement.

The corporation had kept the option of retaining oversubcription on the 10-year bond carrying annual interest rate of 13.85 per cent, they said, adding within a week of floatation on December 28 last year, PFC had already secured over Rs 50 crore.

The "unsecured redeemable bonds" would have a face value of Rs 1 lakh each.

PFC had appointed five arrangers to the issue including SBI Capital Markets Ltd, KotakMahindra Capital Company, RR Finance, AK Capital Services and Centram Finance Ltd, the sources said.

Bonds have been given highest rating "FAAA" by Credit Rating and Information Services of India Ltd (Crisil) and `MAAA' by Icra Ltd, sources said.