In March 2019, India’s government-owned Power Finance Corporation (PFC) acquired 52.3% the Rural Electrification Corporation Ltd. (REC) to form the country’s largest non-banking finance company (NBFC), and a critically important lender for India’s power sector with a total asset book approaching US$100bn as of December 2019. In this report we appraise the impact of PFC and REC’s continued lending to coalfired projects on the India’s power sector, given the ongoing stress in India’s NBFC sector post the Infrastructure Leasing & Financial Services Ltd. default. Over the years PFC and REC have lent extensively to coal-fired power projects, with Rs343,746 crore (US$49bn), or 54% of their total loan book exposed to the thermal power sector.

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