Power Finance Corporation: A Government-Backed Green Bond Pioneer

 Power Finance Corporation: A Government-Backed Green Bond Pioneer



Introduction 1

Introduction of PFC 1

Key Green Bond Issuances by PFC 2

Utilization of Green Bond Proceeds 2

Domestic Market Activity 2

Conclusion 2



Introduction

Power Finance Corporation (PFC) has been actively engaged in the issuance of green bonds, primarily in international markets, to support renewable energy projects in India. While PFC has not issued green bonds specifically targeted at the domestic Indian market, its international issuances have significantly contributed to India's renewable energy financing.

Introduction of PFC

Power Finance Corporation Ltd (PFC) is a government-owned entity.Ownership: PFC is a Maharatna Central Public Sector Enterprise (CPSE) under the Ministry of Power, Government of India.Incorporated: July 1986, Non-Banking Financial Company (NBFC) – Infrastructure Finance Company (IFC). Primary Role: It provides financial assistance to the power sector, including generation, transmission, distribution, and renewable energy.
The Government of India holds the majority shareholding in PFC.

Key Green Bond Issuances by PFC

  1. USD 400 Million Green Bond (2017)
     In December 2017, PFC issued its maiden green bond in the international markets, raising USD 400 million with a 10-year maturity and a coupon rate of 3.75%. The funds were utilized to promote renewable energy projects in India .

  2. EUR 300 Million Euro-Denominated Green Bond (2021)
     In September 2021, PFC issued India's first-ever Euro-denominated green bond, raising EUR 300 million with a 7-year maturity and a coupon rate of 1.841%. This issuance marked a significant milestone in diversifying PFC's funding sources and investor base .

Utilization of Green Bond Proceeds

The proceeds from these green bonds have been allocated to finance renewable energy projects, including solar and wind energy initiatives. As of March 31, 2024, PFC had outstanding loan balances of ₹19,610 crore for solar projects and ₹16,551 crore for wind energy projects, totaling a capacity of 13,492 MW .(idbidirect.in)

Domestic Market Activity

In the domestic market, PFC has faced challenges in issuing bonds due to weak investor demand and market conditions. For instance, in April 2025, PFC shelved its plan to raise ₹6,000 crore through zero-coupon and 15-year bonds amid lackluster demand and unattractive pricing .(business-standard.com)


Conclusion

While PFC has not issued green bonds specifically targeted at the domestic Indian market, its international green bond issuances have played a crucial role in financing renewable energy projects in India. The corporation continues to explore opportunities in both domestic and international markets to support the country's renewable energy goals.

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