| "We have decided not to get into the banking sector as it does not make commercial sense," chairman and managing director V K Garg said. |
| The state-owned company had earlier evinced interest in entering into the banking business as a means to access low-cost capital. It had been mulling either converting itself into a banking entity or buying equity stake in a bank. |
| However, the plan of converting into a bank had to be abandoned as it would mean the entity would have to follow prudential lending norms laid down by the Reserve Bank of India (RBI). |
| These norms include the requirement of earmarking 40 per cent of advances to the agriculture sector. Following such norms would also mean the power sector lending agency would lose focus on its core business of funding power projects. |
| The other option of picking stake in a bank also could not take off as the finance ministry is in the process of working out modalities for consolidating public sector banks. |
| PFC had identified three state-owned banks""Bank of India, Indian Overseas Bank and Oriental Bank of Commerce""for picking 26 per cent stake. |
| Its banking foray has been further compounded by the fact that such a move could lead to a potential turf war between the power ministry, which controls the corporation and the finance ministry which controls the banks. |
Explore Business Standard