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| Power Finance Corp mulling over bank buyout option |
| Press Trust of India / New Delhi Jul 22, 2010, 18:41 IST |
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State-owned Power Finance Corporation (PFC) today said that it may consider the option of acquiring a bank or picking up stake in one as the Reserve Bank of India (RBI) is drafting guidelines on new banking licences, to be unveiled later this month.
The PFC board, in a meeting, decided to appoint a consultant that would conduct necessary due diligence on the subject.
"Appointment of a consultant would be done shortly, and it would look into the possibility of converting PFC into a bank, or acquiring a bank, or picking up stake in a bank," company's Chairman and Managing Director Satnam Singh told reporters after announcing the company's quarterly results.
PFC would explore this possibility as the market for non-banking financial companies may not be as lucrative in the long run.
"We want to start this exercise as a long-term prospect... say for 15-20 years," Singh said.
Earlier this month, RBI Deputy Governor K C Chakrabarty had said that RBI would come out with a policy discussion paper on granting new banking licences by the end of July.
Under the current guidelines, a new private sector bank should have a minimum net worth of Rs 300 crore, and no single entity or group of related entities should hold more than 10 per cent stake in it.
Many business houses, including Religare, AV Birla group, Anil Ambani group and Bajaj Auto, have evinced interest in acquiring banking licences.
NBFCs such as Shriram Group and Srei are also keen on getting licences.
Meanwhile, PFC today posted a 17.55 per cent jump in its net profit for the first quarter ended June 30 at Rs 652.35 crore. The company's net profit was Rs 554.91 crore in the same quarter of the previous year.
The total income rose to Rs 2,417.54 crore against Rs 1,892.92 crore in the same quarter a year ago.
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