Power Finance Corporation, REC merger hits roadblock
NEW DELHI: The proposed merger of RECNSE -2.40 % with state-owned shadow banking firm Power Finance CorporationNSE -2.09 % has hit a roadblock and is not likely to happen in near future as it would violate Reserve Bank norms on the exposure of non-banking financial companies (NBFCs), according to sources.
As per the Reserve Bank of India’s (RBI) norms, debt exposure of an NBFC in a project cannot exceed 25 per cent. The exposure of Power Finance Corporation (PFC) and REC as a merged entity would exceed the limit of 25 per cent in any existing project as the two firms have been financing power sector projects.
