REC, Power Finance to enter into banking segment

State-run power sector lenders Power Finance Corp and Rural Electrification Corp are mulling a foray into the banking space, a move that would foster greater competition in infrastructure funding.

"PFC had declared in the company's last press conference that it is going to appoint a consultant to advice us on the banking foray," a senior PFC official said.

The company is in the process of appointing a consultant for the same.

"We have formed a committee to examine the issue of banking entry... We may apply for the banking license in joint venture with a foreign firm," an REC official said confirming that the company is keen to make a banking foray.

Reserve Bank of India has brought out a discussion paper on giving out new banking licenses to business houses and non-banking finance companies, and regulations for the same to foster greater competition.

The central bank sought feedback on this as also business model for the new banks by September 30.

Currently, India has 27 public sector banks, seven new private sector banks, 15 old private sector banks, 31 foreign banks, 86 regional rural banks, 4 local area banks, 1,721 urban cooperative banks, 31 state cooperative banks, and 371 district central co-operative banks.