PFC plans to hike lending rates in May

On the backdrop of a high interest rate scenario, state-run Power Finance Corporation (PFC) is planning to hike its lending rates by 25 to 50 basis points with in May.

“Since all the major banks are hiking the interest rates now, we are also compelled to hike our rates as we are sourcing the money from them. The process is already going on, we expect it to happen with in May. Considering the rates at which banks are hiking rates, we would also increase between 25 to 50 basis points,” said a top PFC official, who does not want to be named.

Currently, the lending rates of PFC is between 11.5 per cent and 13 per cent. “For state power utilities, it is around 11.5 per cent, while for some firms like NTPC, the rates are much lower,” the official said.

Aggressive on overseas ventures, the company may also look into overseas projects for financing and for joint ventures. “We may consider suitable joint ventures and strategic partnerships in India and abroad. We are open to finance even overseas coal acquisitions. A small group is already looking into financing linkages and one such thing is already under consideration for the development of a coal mine in Orissa,” said Rajeev Sharma, Director (Projects) of PFC.

The company has already recieved some proposals from private players regarding coal acquisitions. “Though we have already recieved some proposals, security issues and country risks are a major factor in giving the go-ahead signal. As of now, nothing is finalised,” Sharma added. Meanwhile, there are also plans to finance some of the projects by Indian companies in neighbouring countries like Nepal, Bhutan and Bangladesh.

However, regarding the company’s newly-floated subdsidiary Power Finance Corporation Green Energy Ltd, which will finance renewable energy projects, he said, “We are going to shift the present loan portfolio of Rs 3300 crore in renewable energy to the new subsidiary. The subsidiary is already registered and will be functional soon”.