Power body seeks DFI status

NEW DELHI, June 11: Power Finance Corporation PFC has sought to convince the Reserve Bank of India that it has the necessary operational p...

NEW DELHI, June 11: Power Finance Corporation PFC has sought to convince the Reserve Bank of India that it has the necessary operational presence at the all India level for getting the status of full-flegded financial institution.

In a letter to RBI, the corporation clarified that its operations were not limited to Delhi even though it did not have offices in other cities.

Following PFC8217;s application for Development Financial Institution DFI status, RBI is believed to have expressed reservations for favourable consideration on the grounds of limited and sector specific operations of the corporation.

When contacted, PFC8217;s director finance Tantra Narayana Thakur told PTI that the corporation had sent a letter last week saying that PFC8217;s operations were visible in every state and that sectoral specific lending of PFC should be seen in the light of massive resource requirements of power sector.

The corporation asked for the DFI status on the basis of the Narsimhan committee recommendations foracquiring the automatic powers of raising resources as against the limitations of case by case sanctions associated with a Non-Banking Financial Company NBFC. Meanwhile PFC is also believed to have sought support of the power ministry for getting the DFI status from RBI, corporation sources said. Corporation sources said that PFC also pointed to the case of Tourism Development Financial Corporation which got the DFI status despite being a sector specific activity.

PFC is also contemplating to fund the needs of infrastructure required for setting power projects, Thakur said adding this could act as a strong point for the corporation to get the DFI status. quot;We are looking at financing road and port projects associated with a power project,quot; Thakur said.

He said, even before the Narasimham committee report, PFC had taken up the issue of DFI status with the RBI. The grant of DFI status would help the corporation in accessing the domestic market at short notices. Further, NBFCs are barred from mobilisingfunds twice its net-owned funds from the domestic markets.

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Making a strong case for getting the DFI status, Thakur said that it has a low debt equity ratio of 2.13:1, which is much less compared to other financial institutions. PFC also has a high capital adequacy ratio of 31.5 per cent, he said. The Narasimham committee on financial sector reforms, which had submitted its report to the government recently, had recommended full autonomy to PFC in raising resources both from the domestic and international markets. It has also recommended that PFC should re-orient its operations as a quot;full-fledged financial institutionquot;.