PFC keen on setting up bank, to discuss matter soon

It was registered as an NBFC by the RBI

Power Finance Corporation has said its board would discuss applying for a bank licence, as the state-run lending agency meets the norms for setting up commercial bank which were issued by RBI last week.

"We had expressed interest earlier also, but at that time the guidelines were not clear, now they are and we qualify in both the categories ... Either we can set up a bank or convert ourselves into a bank," Power Finance Corporation Chairman and Managing Director Satnam Singh said.

The company will discuss the matter in its next board meeting, he added.

PFC was set up in July 1986 as a financial institution for the development of power and its associated sectors. It lends to power generation, transmission and distribution projects.

The entity became a public financial institution in 1990 under the Companies Act, 1956. It was registered as an NBFC by the Reserve Bank.

According to the new guidelines issued by RBI on Friday last week, both private and public sector entities will be eligible to set up a bank through a wholly-owned non-operative financial holding company (NOFHC).

RBI has said that the holding company shall be wholly- owned by the promoter or the promoter group. It shall hold the bank as well as all the other financial services entities of the group.

Existing non-banking financial companies (NBFC) will be eligible to apply for a bank licence. If considered eligible, NBFCs may be permitted to promote a new bank or convert themselves into banks, according to the norms.