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PFC seeks infra finance firm status

business Updated: Jul 23, 2010 00:02 IST
HT Correspondent
HT Correspondent
Hindustan Times
Infrastructure Finance Company

In what will further strengthen the financing of infrastructure in the country, the Reserve Bank of India is considering whether to accord the status of the Infrastructure Finance Company (IFC) to the state-owned Power Finance Corporation (PFC).

This will help PFC, which funds public and private power projects, mobilise funds at cheaper rates and increase its lending capacity.

“We fulfill the regulatory criteria of having a 15 per cent capital adequacy ratio (CAR) for being accorded the status of an infrastructure finance company,” chairman and managing director of PFC, Satnam Singh, said.

“We have already applied to the RBI for being accorded this status and expect the new status in a month’s time,” he added.

Singh stated that with the status of a infrastructure finance company, PFC’s exposure to a single group would go up by Rs 650 crore. At present it is restricted to 20 per cent of the company’s net worth (or around Rs 2,600 crore per project).

Singh also said PFC is exploring the possibility of either acquiring a bank or applying for a banking license. “Our (PFC) board met this (Thursday) morning and approved the appointment of a consultant who will look into the pros and cons of converting PFC to a bank, as also on acquiring a bank,” he said.

“Whether it will be retail or wholesale banking services will be decided only after the consultant’s report,” he revealed.

PFC has reported an 18-per cent increase in its net profit for the April-June quarter at Rs 652 crore from Rs 555 crore in the corresponding period in 2009-10.