Power Finance Corporation (PFC), India’s leading power-sector financier, is weighing acquiring a bank or buying a stake in one, while younger sibling Rural Electrification Corporation (REC) is planning to tie-up with a foreign bank.PFC filed its draft red herring prospectus (DRHP) on Thursday for a follow-on public offer.
“We haven’t finalised anything yet on the issue. We might set up a bank or acquire one depending on the options available,” a very senior PFC official told DNA Money, on the condition of anonymity.He refused to explain the benefits of such a move but said the company would soon appoint a consultant for this.The company’s prospectus also does not talk much about the initiative, but said it is looking at options. “We are currently in the preliminary stages of evaluating the possibility of establishing or acquiring a bank and are in the process of appointing a consultant in connection with such an initiative,” the prospectus said.
REC has also had some negotiations with foreign banks to launch its commercial banking foray through a tie-up or a joint venture.“We are waiting for the Reserve Bank of India to come up with the guidelines and then we can finalise a plan. But we have discussed with some foreign banks for a possible joint banking foray in the country, but things are yet to materialise,” said a top REC executive, who also did not wish to be named.The company, he said, could launch its banking venture along with PFC. “If PFC agrees, we can even go ahead jointly,” he said.However, analysts are a little wary of the issue as both PFC and REC don’t have a countrywide presence and also have a small workforce compared with other private non-banking financial institutions (NBFCs).