The Hindu Business Line : PFC drops plans to foray into banking, insurance

(From right) Dr V. K. Garg, CMD, PFC; Mr S. C. Gupta, CMD, Punjab National Bank; and Mr K. N. Prithviraj, CMD, Oriental Bank of Commerce, at a press conference in the Capital on Thursday. - - Ramesh Sharma

New Delhi , Aug. 18

POWER Finance Corporation (PFC) has dropped its plans to enter the banking and insurance sectors because of the high entry-costs involved.

The Corporations Chairman and Managing Director, Mr V.K. Garg, told newspersons here on Thursday that the banking and insurance sectors required lot of funds which a new entrant like PFC could not afford. "It is not worthwhile in the present scenario to go for retail banking," Mr Garg said.

Earlier, PFC had planned to explore the possibility of either converting itself into a bank or acquiring a stake in an existing bank so as to access cheaper funds for lending to power projects.

The corporation was also considering entering life insurance through tie-ups with existing players in the sector.

PFC's plans faced problems because of the lending norms of the Reserve Bank of India (RBI) that stipulate a bank would have to lend 40 per cent credit to priority sector including agriculture whose share is 18 per cent.

Mr Garg said the corporation was also looking at funding projects for fuel linkage to power plants such as captive coal mining and LNG terminals primarily meant for power plants.

"We are looking at funding projects in both backward and forward linkages for power plants. This includes transmission and distribution as well as fuel supply, captive mining, LNG terminals and other such projects," the PFC CMD said.

PFC also plans to enter the capital market with an initial public offer later this year to raise an estimated Rs 1,000 crore and is awaiting Government approval to tap the market.

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