Power Finance Corp eyes foray in banking

Power Finance Corporation is actively seeking a role in the booming banking sector of India. It is in the process of appointing a consultant to guide the company through the entire process.

Higher funding costs, as compared to those applicable to banks, leaves PFC vulnerable to a spike in long-term bond yield spreads. Further, concentration of its lending business in a single sector, which is power, makes it vulnerable to sector specific events. To cope up with this limitation and as a long-term strategy, PFC has decided to benefit from availability of low cost financing, as well as reach out to other sectors.

As a Non Banking Finance Corporation, PFC is unable to accept deposits from the public, which acts as the source of liquidity for banks.