Examining RBI's draft on project financing, see no impact on profitability, says Power Finance Corp

Power Finance Corporation - the PSU lender to power sector - has said that the recent draft guidelines by regulator RBI on infrastructure project financing will not impact profitability, and the company has sufficient capital adequacy to counter the provision if it gets implemented.

"We are examining those guidelines in detail, but what we understand that these guidelines have been issued for the projects under implementing. I would like to say that in such case on the profitability, we are not going to have any impact," Parminder Chopra, Chairperson and MD of Power Finance Corp said. "we have a very comfortable capital adequacy of about 25% as against minimum RBI's requirement of 15% and our tier one capital is also more than 50% as against capital guidelines of RBI. So, we are not expecting any major impact on those guidelines," she added.

The central bank had recently proposed that lenders should set aside a 5 percent provision of the loan amount that is sanctioned for projects at the construction phase. Some sections had voiced concerns around the impracticality of the proposal by RBI.

Earlier, top lender State Bank of India (SBI) too had said that it sees no significant impact on its capital adequacy ratio (CAR) even if tighter draft project financing norms were implemented. Chairman Dinesh Khara said the bank has the capacity to absorb any additional provisioning required by the regulator without delay.