New Delhi: State-owned Power Finance Corporation (PFC) is planning to cut non-performing assets by 10% or around Rs1,500 crore this fiscal, as per an MoU inked with the power ministry.
According to the memorandum of understanding (MoU) inked by the PFC with the power ministry today, the bad loans will be reduced to 90% of the NPAs in 2017-18. The company’s NPAs were around Rs15,000 crore as on 31 December 2017.
A senior official said that the company will go through tough phase in next couple of years to reduce the bad loans on its books, which was mainly due to change in norms for such assets by the Reserve Bank.
The company is also eying a revenue of Rs27,000 crore during the current fiscal which will be slightly higher than Rs26,000 crore expected in previous fiscal.
In order to improve its performance, the company has aimed to increase disbursal to 92% this fiscal from 91% of total available funds in 2017-18.
In the best of circumstances, the company has agreed with the ministry to earn return of 11.5% in the current fiscal as compared to 14.63% expected in 2017-18. The PFC finances power sector projects and its main source of revenue is interest income on loans.