Latest news with #PFC
Mint
7 hours ago
- Business
- Mint
PFC, HUDCO, IREDA, REC shares surge
New Delhi, Shares of financial institutions such as PFC and HUDCO surged on Friday after the Reserve Bank issued norms to provide a harmonised framework for financing of projects in infrastructure and non-infrastructure sectors by banks, NBFCs and other regulated entities. The stock of Power Finance Corporation surged 4.92 per cent, HUDCO soared 4.72 per cent, Indian Renewable Energy Development Agency jumped 4.03 per cent, REC rallied 2.96 per cent and Indian Railway Finance Corporation climbed 1.47 per cent on the BSE. "The rally was broad-based, with all sectoral indices ending in the green, led by financials after the RBI eased provisioning norms for project... effective October 2025. This is particularly positive for power financiers like PFC and REC, due to their large exposure to power sector projects," Siddhartha Khemka, Head - Research, Wealth Management, Motilal Oswal Financial Services Ltd, said. The Reserve Bank of India Directions, 2025 lay down the revised regulatory treatment upon change in the 'date of commencement of commercial operations' of such projects in the backdrop of a review of the extant instructions and analysis of the risks inherent in such financing. The RBI said the directions entail the adoption of a principle-based regime for resolution of stress in project finance exposures, harmonised across regulated entities . "In under-construction projects where the aggregate exposure of the lenders is up to ₹ 1,500 crore, no individual lender shall have an exposure which is less than 10 per cent of the aggregate exposure," the RBI said. For projects where aggregate exposure of all lenders is more than ₹ 1,500 crore, the exposure floor for an individual lender shall be 5 per cent or ₹ 150 crore, whichever is higher. Further, a lender shall ensure that all applicable approvals/clearances for implementing/constructing the project are obtained before financial closure. The Reserve Bank of India Directions, 2025 shall come into force with effect from October 1, 2025, the central bank said. "Final guidelines on project finance comes as a relief to the lenders..." A M Karthik, Senior Vice President & Co-Group Head, Financial Sector Ratings, ICRA Ltd, said on the RBI guidelines on project loans. This article was generated from an automated news agency feed without modifications to text.
Business Standard
13 hours ago
- Business
- Business Standard
PFC, REC gain as RBI unveils final project finance norms
Shares of Power Finance Corporation (PFC) and REC rose by 3.33% to 5.37% after the Reserve Bank of India (RBI) issued its final Project Finance Directions, 2025. The comprehensive framework, aimed at streamlining and standardizing project loan regulations across banks, NBFCs, and cooperative lenders, comes into effect from 1 October 2025. The market responded swiftly to the announcement, with shares of key project financiers surging in morning trade. PFC jumped 5.37%, while REC climbed 3.33%, as investors welcomed the regulatory clarity and operational flexibility promised by the new guidelines. Compared to the RBIs draft proposal from May 2024, which had outlined a steeper 5% standard asset provisioning for under-construction projects, the final guidelines dial things down substantially. Now, lenders will need to set aside just 1% for infrastructure projects and 1.25% for commercial real estate (CRE). Thats a major breather for dedicated project financiers like REC and PFC, who had been staring at potentially higher capital requirements under the earlier draft. The RBI has rationalized the norms around the extension of the 'Date of Commencement of Commercial Operations' (DCCO), allowing extensions of up to three years for infrastructure projects and two years for non-infrastructure ones. Lenders will also have greater flexibility to assess and decide on DCCO extensions within these ceilings based on commercial viability. The provisioning requirements for under-construction projects have been streamlined as well. Lenders will now set aside a standard 1% for such exposures, with a gradual increase depending on the length of DCCO deferment. In the case of under-construction commercial real estate, the initial provisioning will be slightly higher at 1.25%. For projects that have already achieved financial closure, existing provisioning rules will continue to apply, ensuring a smooth transition to the new regime. Once projects become operational, the provisioning rates are clearly defined: 1% for commercial real estate, 0.75% for CRE-residential housing, and 0.40% for other project loans. This structured approach is expected to bring predictability to provisioning and risk management practices. The market view is clear: the final norms are far more balanced and pragmatic. They reduce capital drag without compromising prudential standards. The relaxed provisioning norms, coupled with the exclusion of existing loan books from the new rules, would have negligible impact on NBFC and bank profitability. For power sector financiers like PFC and REC, the relief is doubly reassuring. Even the marginal provisioning required under the new norms will be comfortably absorbed through existing impairment reserves. Importantly, the directions only apply to loans achieving financial closure on or after 1 October 2025, meaning current portfolios are unaffected. While the earlier draft had also proposed a stringent 360-day performance requirement for loan upgrades -- another red flag for lenders, this too has been relaxed in the final version. The overall tone of the guidelines has shifted from caution-heavy to growth-accommodating, signalling the RBI's intent to support long-term infrastructure finance without straining lender balance sheets.
India Today
16 hours ago
- Business
- India Today
Power Finance Corporation share price jumps 6% today. Here's why
Shares of Power Finance Corporation (PFC) saw a sharp rise of nearly 6% on Friday, climbing to Rs 412 during the day's rally in the stock came after the Reserve Bank of India (RBI) finalised new guidelines on project finance, which are seen as a positive move for companies with large exposure to infrastructure PFC has faced some pressure in recent months, with its stock falling 9.14% in the last six months and 14.44% over the past year, Friday's gain marks a strong rebound following the regulatory main reason behind the share price jump is the RBI's decision to ease provisioning norms for under-construction infrastructure projects. Under the new rules, lenders including banks and non-banking financial companies (NBFCs) like PFC will need to set aside less money as a cushion for possible loan defaults on such financial institutions had to keep a higher amount of funds as a safeguard, even when loans were not yet overdue. This impacted the funds available for fresh lending. Now, with reduced provisioning requirements, lenders will be able to free up more capital and offer more loans, especially in areas such as power, housing, roads, railways, and other key infrastructure is particularly beneficial for PFC, as it plays a key role in financing power and energy infrastructure in India. The company often deals with long-term loans tied to large projects, many of which are under construction for years before they start generating RBI's decision is being viewed as a step toward supporting infrastructure development by improving access to credit. The new rules may help in speeding up the pace of project financing, reduce the burden on lenders, and bring more confidence to the responded positively to the development, leading to strong buying in PFC shares. As a result, the stock not only recovered some of its past losses but also gained attention for potential upside in the near term. advertisement
Business Upturn
17 hours ago
- Business
- Business Upturn
REC shares rise over 2% as RBI finalises favourable project finance norms; CLSA sees 37% upside
By Aditya Bhagchandani Published on June 20, 2025, 09:30 IST Shares of REC Limited climbed 2.25% to ₹392.30 on Friday, June 20, after the Reserve Bank of India released its final guidelines on project financing—offering significant relief to financiers. The final rules are seen as much softer than the earlier draft and have eased concerns over regulatory capital erosion for non-banking financial companies (NBFCs) like REC and PFC. As per the new RBI norms, the Provision Coverage Ratio (PCR) for projects under construction has been set at 1% of the total project cost, while for under-construction Commercial Real Estate (CRE) exposures, it will be 1.25%. In the operational phase, provisions will ease further—0.4% for regular project exposures, 0.75% for CRE and residential housing, and 1% for operational CRE assets. CLSA noted that unlike the earlier draft—which suggested standard PCRs of up to 5%—the final guidelines are far more accommodating. Analysts had feared a 200–300 basis point impact on CET-1 ratios for companies like REC, but the final norms significantly reduce that pressure. CLSA, which has a high-conviction 'Outperform' rating on REC, projects a 37% upside. The brokerage noted that the Ministry of Power is actively working to ease right-of-way and clearance challenges in the power infrastructure space—key hurdles that REC and PFC had cited in their lowered FY25 growth guidance. The new norms, effective October 1, also shift focus to better project appraisal. Disbursements will now only be permitted after securing all regulatory approvals and land access, as per CLSA. REC's market cap now stands at ₹1.03 lakh crore, and the rally is seen as a positive response to RBI's calibrated and sector-sensitive regulatory approach. Ahmedabad Plane Crash Aditya Bhagchandani serves as the Senior Editor and Writer at Business Upturn, where he leads coverage across the Business, Finance, Corporate, and Stock Market segments. With a keen eye for detail and a commitment to journalistic integrity, he not only contributes insightful articles but also oversees editorial direction for the reporting team.
Business Upturn
17 hours ago
- Business
- Business Upturn
PFC shares jump over 3% as RBI issues project finance norms for banks, NBFCs
By Aman Shukla Published on June 20, 2025, 09:31 IST Shares of Power Finance Corporation (PFC) rose over 3% in early trade on Friday, reacting positively to the Reserve Bank of India's (RBI) finalised project finance guidelines released on June 19. As of 9:28 AM, the shares were trading 3.19% higher at Rs 402.80. The updated norms ease provisioning requirements for lenders, which had been a concern under the earlier draft guidelines proposed in May 2024. Under the new rules, banks and financial institutions must maintain a 1.25% general provision on loans linked to commercial real estate (CRE) projects during the construction phase. For CRE-Residential Housing (CRE-RH) and other infrastructure projects under construction, the requirement is set at 1%. During the operational phase, the provisioning is further relaxed to 1% for CRE, 0.75% for CRE-RH, and 0.40% for other projects. The final guidelines are notably less stringent than the draft, which had recommended a uniform 5% provision for under-construction projects. Disclaimer: The information provided is for informational purposes only and should not be considered financial or investment advice. Stock market investments are subject to market risks. Always conduct your own research or consult a financial advisor before making investment decisions. Author or Business Upturn is not liable for any losses arising from the use of this information. Ahmedabad Plane Crash Aman Shukla is a post-graduate in mass communication . A media enthusiast who has a strong hold on communication ,content writing and copy writing. Aman is currently working as journalist at
