PFC aide says power fund likely by Feb-end

State Bank of India, Canara Bank and two other domestic banks are awaiting a nod from the Reserve Bank of India (RBI) to invest in India Power Fund promoted by Power Finance Corporation Ltd., a senior corporation official said Monday. The official said he was hopeful of the fund starting operations by the end of February.

The two other public sector banks awaiting RBI's approval are Syndicate Bank and Union Bank.

"The four local banks are awaiting a go-ahead from the RBI to contribute to the fund," the official said.

PFC had proposed a Rs 1,000 crore corpus for the fund, which would pick up minority stakes in private power projects to help them achieve financial closure.

Power Finance would contribute Rs 200 crore to kickstart the fund's operations, the official said.

PFC has already received power ministry's nod to set up an asset management company and a trusteeship company to run the fund.

The AMC would look after investments and an investment committee would be set up to take investment decisions. The government has also agreed to invest another Rs 1,000 crore at a later stage, which will double the strength of the corpus to Rs 2,000 crore.

Under current banking guidelines, banks require RBI's approval to invest in the fund.

Each of these four banks may chip in Rs 100-200 crore towards the corpus.

Simultaneously, National Thermal Power Corporation Ltd is awaiting a nod from the government to invest in the fund. Current regulations do not permit public sector units to invest in such funds.

"National Thermal will contribute to the fund... (However) It may take some more time," the PFC official said, refuting media reports that NTPC had decided not to invest in the fund.

Meanwhile, PFC has set up a separate division""India Power Fund Unit""to work towards operationalising the fund.