PFC marks Gensol exposure as NPA, but asset quality hits seven-year high

Power Finance Corporation (PFC), a government-owned non-banking financial company (NBFC) under the Ministry of Power, has classified its exposure to the tainted Gensol Engineering as a non-performing asset (NPA) in the fourth quarter of FY25. Of the ₹633 crore lent to Gensol in January 2023, ₹307 crore was outstanding. The lender managed to recover ₹44 crore through encashment of fixed deposits and a tripartite agreement, while the remainder (₹263 crore) has been absorbed into additional provisioning of around ₹1,000 crore made during the year.

Despite the Gensol setback, PFC delivered a significant improvement in asset quality. Gross NPA dropped 140 basis points to 1.94%—its lowest level in seven years—while net NPA fell from 0.85% to 0.39%. A key contributor to the improvement was the successful resolution of the KSK Mahanadi case, which unlocked recoveries.

The robust asset profile coincided with record profitability. PFC reported its highest-ever consolidated profit after tax (PAT) of ₹30,514 crore in FY25, up 15% from ₹26,461 crore in FY24. Standalone PAT rose 21% to ₹17,352 crore from ₹14,367 crore, making it the most profitable non-banking financial company (NBFC) in India.

PFC’s consolidated balance sheet crossed ₹11.7 lakh crore, while its loan book expanded 12% to ₹11,09,996 crore. On a standalone basis, the loan book rose 12.8% to ₹5,43,120 crore. The corporation’s net worth stood at ₹90,937 crore as of March 31, 2025—a 15% year-on-year increase—while the consolidated net worth climbed 16% to ₹1,55,155 crore. The board has approved a final dividend of ₹2.05 per share, taking the total dividend for FY25 to ₹15.80.

Speaking to Fortune India, Parminder Chopra, Chairperson and Managing Director, termed the Gensol default a one-off event and said it would not affect PFC’s appetite for lending to EV or renewable projects. “Considering the size of our balance sheet, the loan amount is small, and such a small incident doesn’t give you any guidance that the future of the industry is over,” Chopra said.

Between FY22 and FY24, Gensol secured loans totalling ₹977.75 crore from state-run lenders PFC and IREDA. Of this, ₹663.89 crore was specifically sanctioned for procuring 6,400 electric vehicles (EVs) intended for leasing to BluSmart. However, Gensol has since acknowledged that it purchased only 4,704 EVs worth ₹567.73 crore. Considering the company was required to contribute 20% of the project cost as equity, the total expected fund deployment should have amounted to ₹829.86 crore. This leaves an unexplained shortfall of ₹262.13 crore, raising serious questions over fund utilisation.

While Chopra declined to comment on specific action against Gensol’s promoters, saying “all options” were being explored, IREDA has already taken legal steps. The lender filed a petition with the National Company Law Tribunal (NCLT), Ahmedabad, after issuing recall and demand notices on May 4 and invoking promoter guarantees on May 13. IREDA has claimed ₹510 crore in actual and potential defaults across five loan facilities extended to Gensol.

Defending PFC’s risk framework, Chopra said the case was limited to the promoter’s conduct and did not indicate flaws in the corporation’s lending practices. “This project does not reflect upon PFC’s appraisal methodology, nor the risk mitigation strategies adopted by PFC,” she asserted.

Meanwhile, PFC’s renewable loan book crossed ₹81,031 crore, up 35% year-on-year, making it the largest in the country. Clean energy and distribution projects accounted for 17% and 55% of total disbursements, respectively. The corporation also sees medium- to long-term lending potential in thermal and nuclear segments, depending on policy direction. Integrated renewable projects—solar-wind hybrids with battery or pumped storage—are emerging as key growth areas.