Shimla: In a significant move aimed at strengthening financial governance and improving the management of public sector undertakings (PSUs), the Himachal Pradesh Government has decided to establish the Himachal Pradesh State Finance Corporation, a new Non-Banking Financial Company (NBFC) that will oversee the financial management of state government boards and corporations.
The decision was approved in the recent State Cabinet meeting. Following the Cabinet approval, the Finance Department has been tasked with completing the necessary formalities for incorporating the company and securing the required regulatory approvals.
According to official information, the proposed Himachal Pradesh State Finance Corporation will function as an NBFC and will require registration and a licence from the Reserve Bank of India (RBI) before commencing operations. The company will be responsible for managing the financial resources of state government boards and corporations, providing the government with a consolidated view of their finances.
Himachal Pradesh currently has 23 public sector undertakings, of which 13 major PSUs are operating at a loss, while 10 are running profitably. These undertakings collectively employ around 30,000 people. Among the loss-making entities, the Himachal Pradesh State Electricity Board and the Himachal Road Transport Corporation (HRTC) account for the largest financial losses, while the remaining PSUs have comparatively lower deficits.
At present, these government undertakings maintain their funds in various public and private sector banks. Once the new finance corporation becomes operational, it will manage the financial corpus of these entities. While the boards and corporations will continue to have autonomy in utilising their funds, bringing their financial resources under a single institution is expected to improve financial monitoring, transparency and planning. The consolidated corpus fund could also be leveraged to enhance the state’s financial capacity and optimise resource utilisation.
Officials said the proposed corporation will undertake non-banking financial activities in accordance with RBI norms. Although an NBFC is not a bank, it is permitted to offer a range of financial services, including loan disbursement, vehicle and equipment financing, microfinance, gold loans, business loans, leasing and other financial services.
Before beginning operations, the corporation will have to be incorporated under the Companies Act, 2013, after which it must obtain a Certificate of Registration from the Reserve Bank of India. Under RBI regulations, no company can function as an NBFC without the mandatory registration and licence.
