Banking News

PTC Financial Services raises Rs 275 crore from IIFCL in its first ever borrowing since crisis

PTC India Financial Services (PFS), accused of corporate misgovernance, managed to raise Rs 275 crore from a state-owned financial institution as it looks to grow after a year of business shrinkage.

The loan was mobilised from India Infrastructure Finance Co (IIFCL) last week, two people familiar with the matter told ET.

PFS did not comment on the matter. IIFCL officials could not immediately be reached for comments.

Its assets under management shrunk to around Rs 7300 at the end of December 2022 crore from Rs 8652 crore nine months prior to that.

All three independent directors at PFS had resigned in January 2022, alleging corporate governance lapses. They had raised concerns about the absence of information sharing on specific loan accounts and the management’s inaction on addressing corporate governance issues raised by the company’s previous chairman.

This is the first PFS attempt at raising funds since the allegations were made. PFS resumed business after reconstruction of its board in November 2022, although issues pertaining to corporate governance continued to linger.

In February this year, the Ministry of Corporate Affairs had asked PFS why no action would be taken against it for non-compliance with rules on the appointment of forensic auditors in a loan default case, and for not sharing that audit report with the erstwhile independent directors for more than two years.To be sure, PFS needs funds for the estimated Rs 6,000 crore of financing pipeline.

Before the allegations of misgovernance were made, followed by resignations of independent directors, PFS used to largely borrow from banks. More than 97% of its financing came from lenders such as Canara Bank, Union Bank of India and Bank of India.

Its total borrowing stood at Rs 5,380 crore at the end of December 2022. State Bank of India, Bank of Maharashtra and Punjab National Bank are also among the lenders.

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