The budget has proposed restructuring REC Ltd and Power Finance Corp. Ltd as a first step to achieve scale and improve efficiency in state-run non-banking finance companies (NBFCs).
As per industry officials, the announcement suggests a move toward modernising their business models, which may include better risk management and adoption of market-driven approaches. This will make them ready for the larger scale of investments that will be required in the electricity sector in the coming years to meet the dual goals of supporting GDP growth and energy transition, Anujesh Dwivedi, partner, Deloitte India, told ET.
Details of the process and the mechanism of restructuring need to be seen, industry officials said. From a sectoral perspective, a well-executed restructuring can unlock capital for fresh lending into transmission, distribution and renewable projects while reducing systemic risks.