Reserve Bank of India (RBI), India’s central bank, has classified PTC India Financial Services (PFS), a subsidiary of Indian power trading business, PTC India, as an infrastructure finance company, enabling it to make infrastructure loans on favourable terms, a source close to the company told Infrastructure Investor.
Set up as an investment arm of PTC India, PFS has been classified under a new category recently created by RBI within the overall classification of Non-Banking Finance Company (NBFC), the source said.
The new classification will enable PFS to engage in infrastructure lending at a lower cost and on a more flexible basis.
Under the classification, Infrastructure Finance Companies (IFCs) are allowed to have higher exposure for lending and investment to a single borrower or a group of borrowers. It also allows companies to raise up to 50 percent of its owned funds automatically in the overseas markets – through external commercial borrowings (ECB) – without having to seek government approval.
The classification also exempts PFS from other restrictions that affect Indian NBFCs, such as the inability to lend more than 10 percent of its owned fund to any single borrower or the inability of lending more than 15 percent of its owned fund to any single group of borrowers.
PTC India, of which PFS is a subsidiary, currently holds 77.2 percent of the equity in PFS while the remainder is held by GS Strategic Investment and Macquarie India Holdings in equal proportion. PTC has sanctioned around INR30 billion (€501.4 million; $640.1 million) in debt and equity financing for more than 40 projects in the power sector, both coal based as well as renewable-based power projects across the country, according to media reports.
PFS is the third company after Indian infrastructure giant IDFC and Indian engineering firm Larsen & Toubro, to have gained IFC status.