State-owned Power Finance Corporation (PFC) is planning to cut non-performing assets by 10 per cent or around 15 billion this fiscal, as per an MoU inked with the power ministry.
According to the memorandum of understanding (MoU) inked by the PFC with the power ministry on Monday, the bad loans will be reduced to 90 per cent of the NPAs in 2017-18. The company's NPAs were around 150 billion as on December 31, 2017.
A senior official said that the company will go through tough phase in next couple of years to reduce the bad loans on its books, which was mainly due to change in norms for such assets by the Reserve Bank.
The company is also eying a revenue of 270 billion during the current fiscal which will be slightly higher than 260 billion expected in previous fiscal.
In order to improve its performance, the company has aimed to increase disbursal to 92 per cent this fiscal from 91 per cent of total available funds in 2017-18.
In the best of circumstances, the company has agreed with the ministry to earn return of 11.5 per cent in the current fiscal as compared to 14.63 per cent expected in 2017-18.
The PFC finances power sector projects and its main source of revenue is interest income on loans.