The Ministry of Corporate Affairs, through its notification dated September 26, 2011, published in the Official Gazette of India notified Srei, as a Public Financial Institution under Section 4A of the Act. As a result of the PFI status, Srei is required to undertake certain continuing compliances such as the main business of our Company should be industrial / infrastructural financing, the financial statement should show that its income from industrial/ infrastructural financing exceeds 50% of its income; and the net-worth of our Company should be at least Rs. 10,000 million.
Being a PFI, Srei benefits from section 36(1) (vii c) of the Income Tax Act, which permits a PFI to include doubtful debts as an eligible deduction under the Income Tax Act. Consequently, the operations of Srei are subject to relatively low tax liabilities.
Criteria for obtaining PFI status
The Ministry of Corporate Affairs (MCA) issued ‘PFI Guidelines’ on June 2, 2011, for granting the Public Finance Institution (PFI) status to a financial institution under Section 4A of the Companies Act.
A financial institution has to comply with the following requirements to obtain a PFI status:-