PFC Gets Infrastructure Finance Company Status From RBI (29-Jul-2010)
Government owned Power Finance Corporation (PFC) has received 'Infrastructure Finance Company (IFC)’ status from the Reserve Bank of India (RBI) pursuant to the company’s request for the same to the apex bank earlier this year. In February 2010, RBI had introduced new category of Non-Banking Finance Companies (NBFCs) as IFC.
Following this categorization, the company will now be able to take an additional lending exposure of up to 5% of its owned funds in case of a single borrower as well as group of borrowers in the private sector. Banks are one of the major providers of funds to PFC. Exposure of banks can now be 20% of its capital funds (instead of 15% earlier) including the additional 5% exposure allowed for lending to infrastructure sector.
Moreover, as IFC, risk weight of banks' finance to PFC will be 20% vis-a-vis extant risk weight of 100% earlier. Lower risk weight is expected to help the company in securing competitive interest rates from banks. Besides this, it can also apply for issuance of infrastructure bonds.
PFC had posted an increase of 17.55% in its net profit at Rs 652.35 crore for the quarter ended June 30, 2010 as compared to Rs 554.91 crore for the quarter ended June 30, 2009.
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