On behalf of the Board of Directors, it is my privilege to present the 40^th Annual Report of your Company for the Financial Year ended March 31, 2026, together with the Audited Financial Statements and the Reports of the Joint Statutory Auditors and the Comptroller and Auditor General of India thereon.

The Financial Year 2025-26 marks a significant milestone in the Company's journey as PFC completes four decades of dedicated service to the Nation. Since its inception in 1986, the Company has remained committed to supporting the development of India's power sector through timely and innovative financial solutions. Over the years, PFC has evolved into a Maharatna Central Public Sector Enterprise and one of India's largest Government-owned NonBanking Financial Companies (NBFCs), playing a pivotal role in financing the power and infrastructure sectors while contributing to the country's economic growth and energy security.

During the year under review, the Company delivered another year of strong financial and operational performance despite evolving global economic conditions and a dynamic business environment. Growth in the loan asset portfolio, sustained resource mobilisation at competitive costs, continued improvement in asset quality, and disciplined capital allocation contributed to the Company's robust financial performance. The Company maintained a healthy capital adequacy position, strong liquidity profile, and sound asset quality, reflecting the resilience of its business model and the effectiveness of its risk management practices.

The Board remains committed to the highest standards of corporate governance, transparency, accountability, and ethical business practices. The Company continues to strengthen its governance framework, internal controls, digital capabilities, and sustainability initiatives while maintaining a balanced approach towards growth, risk management, and stakeholder value creation.

CELEBRATING 40 YEARS OF EMPOWERING INDIA'S ENERGY FUTURE

The completion of forty years is a significant milestone in the Company's distinguished journey of supporting India's development through Power and infrastructure financing. Since its inception in 1986, PFC has been instrumental in financing landmark projects across the power value chain, expansion of generation capacity, strengthening of transmission networks and modernisation of distribution infrastructure.

Over the years, the Company has successfully transformed S its business model in line with the evolving needs of the ^ economy. From financing conventional power generation, PFC has expanded its portfolio to support renewable

energy and sustainable infrastructure. PFC also finances non-power infrastructure sector such as roads and highways, railways, airports, ports etc. while continuing to maintain its leadership in power sector financing.

Today, your Company is more than a financial institution-it is a strategic partner in India's development journey. Through its financial strength, sectoral expertise and unwavering commitment to responsible growth, it continues to catalyse investments that advance energy transition, infrastructure development and economic resilience.

As your Company enters its fifth decade, it remains well positioned to support India's expanding energy and infrastructure requirements and to capitalise on emerging opportunities arising from the country's energy transition and infrastructure development agenda. With its strong financial fundamentals, diversified business portfolio, and experienced leadership, PFC is confident of sustaining its growth trajectory while continuing to create long-term value for its shareholders and other stakeholders.

1.    FY2025-26 - A Year Of Exceptional Growth

During the Financial Year 2025-26, your Company continued its growth trajectory and delivered robust financial and operational performance despite the evolving macroeconomic environment. The key achievements of the Company during the year are summarised below:

Financial Excellence

•    Achieved the highest ever standalone Profit After Tax of K20,051 crore, registering another year of strong growth.

•    Standalone Total Income increased to K58,542 crore.

•    Consolidated Total Income crossed K1.15 lakh crore.

•    Continued to maintain one of the strongest capital adequacy ratios amongst NBFCs with CRAR of 23.44%.

•    Standalone net worth crossed the landmark milestone of K1,00,000 crore.

Asset Quality

Your Company further strengthened its asset quality during FY2025-26.

•    Gross Credit Impaired Assets reduced to 1.09% from 1.94% in the previous year.

•    Net Credit Impaired Assets reduced to 0.15% from 0.39%.

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•    Gross Stage-III Assets reduced significantly.

•    Stage-III Assets declined to 16,323 crore, reflecting sustained recovery efforts and prudent credit management.

2. PFC'S Financial and Operational

Health: A Pillar of Sustainable Growth

i.    Financial Value Creation (Standalone)

•    Profit After Tax (PAT) increased by 16% in FY2025-26 from 117,352 crore in FY2024-25 to 120,051 in FY2025-26.

•    Net worth increased by 13% on account of increasing profits i.e. 11,02,532 crore as at March 31, 2026 vs 190,937 crore as at March 31,2025.

•    Earnings per share stood at 160.76 in FY2025-26 as compared to 152.58 in FY2024-25 showing an increase of 16%.

ii.    Stronger Trajectory in Consolidated

Performance:

•    10% increment in PAT i.e 133,625 crore in FY2025-26 vs 130,514 crore in FY2024-25.

•    The gross loan assets recorded a growth of 5%, 111,63,768 crore as at March 31, 2026 from 111,09,996 crore as at March 31,2025.

•    Net Worth of the Company grew by 13% in FY2025-26 to 11,32,861 crore as compared to 11,17,738 crore in FY2024-25.

•    Significant reduction in NPA

iii. Dividend

The Board of Directors of the Company has recommended final dividend amounting to ?1303.54 crore (approx.) @ 39.50% on the paid up equity share capital i.e. I 3300,10,17,600/- per equity share of 110/- each for the FY2025-26 subject to the approval of the shareholders at the ensuing Annual General Meeting. The Company had also paid interim dividend amounting to 14,818.15 crore @ 146% on the paid up equity share capital i.e. 1 3300,10,17,600/- per equity share of 1 10/- each during FY2025-26.

6. Brand Presence & Stakeholder Engagement

During FY2025-26, your Company strengthened its brand presence and stakeholder engagement through a series of strategic industry forums, investor interactions, exhibitions, and public outreach initiatives. Participation in marquee platforms such as India Energy Week, GRIDCON, and ELECRAMA, alongside the Central Sector Meet, Annual Investor Meet, and nationwide energy conservation campaigns, reinforced PFC's leadership in powering India's energy transition and infrastructure development.

These initiatives showcased PFC's evolving role beyond infrastructure financing—as a trusted knowledge partner, an advocate of sustainable development, and a catalyst for innovation across the power and infrastructure ecosystem. By fostering transparent dialogue with investors, policymakers, industry leaders, and communities, the Company enhanced stakeholder confidence, expanded its

public visibility, and further strengthened the PFC brand as a future-ready Maharatna driving India's growth agenda.

Through these efforts, PFC successfully advanced its image.

i. Borrowers Meet

During FY2025-26, your Company successfully organised various Meets/Conference on the theme "PFC's Financing in Dynamic Regulatory Environment".

• Central Sector Entities Meet

Central Public Sector Undertakings (CPSUs) under the Ministry of Power are undertaking significant capital expenditure programmes in the power generation and transmission sectors to meet the country's growing power requirements. The power generation sector in India is expected to witness substantial growth, with installed capacity projected to nearly double by 2031-32. The renewable energy sector

iii.    Strategic Industry Engagement

PFC maintained a strong presence across premier national and international forums, conferences, policy dialogues and industry summits including India Energy Week 2026, Bharat Electricity Summit 2026, EDICON 2026, India Global Forum NXT25, India International Trade Fair (IITF), Business Summit at the University of Delhi, and various Ministry of Power-led initiatives. Senior Management actively participated as keynote speakers, panellists and thought leaders, sharing insights on energy transition, green finance, power distribution reforms, digitalisation, infrastructure financing, smart grids, AI-enabled utilities, DISCOM sustainability and financial innovation. These engagements enhanced PFC's visibility as a trusted knowledge partner and thought leader in India's evolving energy landscape.

iv.    Brand Visibility through Strategic Partnerships

During FY2025-26, PFC further strengthened its institutional profile through strategic collaborations with leading global and domestic organisations. Engagements with international institutions - KfW (Germany), Japan Bank for International Cooperation (JBIC), Export Finance Australia (EFA) and Citi -supported access to global capital, concessional financing and technology cooperation for clean energy transition, while collaborations with domestic entities, including Mumbai Metropolitan Region Development Authority (MMRDA), MECON Limited, National Test House (NTH) and various Government agencies, strengthened technical cooperation, quality assurance and institutional capacity-building for infrastructure delivery. Together, these engagements reinforced PFC's position as a trusted development finance institution and a strategic partner in India's energy transition.

v.    Public Outreach and Citizen Engagement

PFC continued to actively support flagship Government initiatives through large-scale public outreach campaigns, awareness programmes and citizen engagement activities. The Corporation organised and participated in campaigns under Swachhta Pakhwada, Swachhta Hi Seva (Swachhotsav), Mission LiFE, Har Ghar Tiranga, Fit India Movement, National Sports Day, Constitution Day, Vigilance Awareness Week, Nasha Mukt Bharat Abhiyan and Energy Conservation Awareness Programmes. Through cleanliness drives, plantation campaigns, painting competitions, public installations, awareness workshops, health camps, blood donation drives and behavioural change initiatives, PFC promoted environmental sustainability, civic responsibility, energy conservation and social awareness among employees and the wider community.

vi.    Media and Investor Engagement

The Corporation maintained proactive engagement with media, investors and the financial community through quarterly financial results announcements, press conferences, analyst interactions, brokers' meetings, Annual General Meeting communications and investor awareness campaigns. PFC also undertook extensive communication initiatives relating to its public issue of Non-Convertible Debentures (NCDs), strengthening investor confidence and reinforcing its reputation for transparency, financial discipline and stakeholder responsiveness.

vii.    Digital Communication and Brand Amplification

PFC continued to leverage its digital communication platforms to amplify corporate achievements, Government initiatives, policy advocacy, sustainability efforts and stakeholder engagement. Through integrated campaigns across social media and digital platforms, the Corporation enhanced public awareness regarding power sector reforms, clean energy, energy efficiency, financial inclusion, corporate governance, employee engagement and CSR initiatives, thereby strengthening its digital brand presence and stakeholder connect.

viii.    Employee Engagement and Internal Brand Building

The Corporation organised several employeecentric initiatives focusing on health and wellness, yoga, preventive healthcare, sports, learning and development, vigilance awareness, cyber security, ethics, official language promotion and professional capacity building. Such programmes strengthened organisational culture, promoted employee wellbeing and reinforced PFC's identity as a responsible and people-centric organisation.

ix.    Recognition and Corporate Reputation

During the year, PFC's sustained financial performance, governance standards and sectoral leadership received significant recognition. The Corporation earned prestigious industry accolades, including recognition as the "Most Admired Infrastructure Debt Financer - Power", while also strengthening its position among India's leading corporates. These recognitions further enhanced PFC's corporate reputation and reaffirmed stakeholder confidence in its strategic direction.

i. Borrowings from Domestic Market

During FY2025-26, the Company successfully mobilised 170,683.98 crore from the domestic debt market, reflecting continued investor confidence in PFC's strong credit profile and market standing. The borrowings were raised through a diversified mix of instruments, as detailed below:

Cash Credit/Overdraft Facilities

The Company continued to maintain a proactive approach towards liquidity management by implementing prudent strategies for efficient deployment of fund-based resources. As part of its liquidity risk mitigation framework and to ensure readiness for any short-term funding requirements, the Company secured committed credit facilities from various scheduled commercial banks. As on March 31, 2026, the sanctioned credit lines stood at 17,190 crore, providing an additional layer of financial flexibility and liquidity support for day-to-day operations.

LCR Compliance

The Reserve Bank of India (RBI) has prescribed the Liquidity Coverage Ratio (LCR) framework for NBFCs to ensure maintenance of an adequate liquidity buffer. The framework requires NBFCs to hold sufficient High-Quality Liquid Assets (HQLA) to withstand any acute liquidity stress scenario for a period of 30 calendar days.

PFC is maintaining 100% of the required HQLA to cover the net cash outflows over the next 30 calendar days, in accordance with the RBI guidelines on LCR. As on March 31, 2026, the Company's HQLA stood at 13,349.05 crore, with an LCR ratio of 148.60%, demonstrating compliance with the applicable regulatory requirements.

ii. External Borrowings

During FY2025-26, your Company mobilised foreign currency denominated borrowings aggregating to 19,438.79 crore. The borrowings comprised foreign currency term loans, while no short-term loans in foreign currency were availed during the year.

PFC established its Green Bond Framework in October, 2017 as approved by Climate Bonds Initiative (CBI), London, UK. The Green Bond framework for funding renewable projects (viz. Solar and Wind) has been updated in February, 2026 to align with the latest set of guidelines namely Climate Bonds Standard version 4.3, the Green Bond Principles (GBP), 2025 issued by the International Capital Markets Association (ICMA) and the Green Loan Principles published by the Loan Markets Association (LMA), Asia Pacific Loan Market Association (APLMA) and Loan Syndications and Trading Association (LSTA) in 2025.

The Green Bonds issued by PFC:

Annual update to the holders of the bonds, as required under the PFC's Green bond framework is as follows:-

The funds raised under Green bonds have been utilised to finance renewable energy projects as per the "Eligible Projects" under PFC's Green Bond Framework. As at 31.3.2026, outstanding

loan balances of Solar & Wind energy projects funded by PFC are I 22,269 crores & I 14,556 crores respectively. The total capacity of Solar & Wind energy projects funded by PFC and which are outstanding as on 31.3.2026 is 12,310 MW. Accordingly, PFC green bond portfolio is more than the amount raised through issue of green bonds.

Externally Aided Projects

Outstanding balance from multilateral/bilateral agencies as at March 31, 2026 is as follows:

8. Domestic and International Credit Rating

Your Company continued to maintain its strong credit standing, with the highest ratings assigned by domestic credit rating agencies and sovereign ratings from international credit rating agencies as on March 31, 2026. These ratings reflect the Company's strong financial position, credit profile, and sound financial management practices. The Company believes that its robust rating profile strengthens its relationship with lenders and enables access to funds at competitive rates.

9. Memorandum of understanding with Govt. of India

Your Company enters into a Memorandum of Understanding (MoU) with the Ministry of Power (MoP) every year wherein your Company is evaluated on various financial and non-financial parameters. The performance of your Company in this regard is as follows:

•    Consistent Rating: ‘Excellent' by Government of India

•    FY2024-25: ‘Excellent' Rating Received

•    FY2025-26: Rating Awaited

In FY2025-26, the achievement of your Company on some of the key MoU parameters (on standalone basis) has been as under:

iv. Cost of Raising Funds through Bonds compared to Similarly Rated CPSEs:

During the financial year 2025-26, PFC had raised funds of I 36,341.77 crore (other than perpetual debt instruments) through listed domestic bonds, at a cost which is 12.44 bps lower than the rates of similarly rated instrument issued by other CPSEs/entities (margin over LSEG - London Stock Exchange Group, erstwhile Reuters).

viii. Targets under the PM Internship Scheme of MCA

The Prime Minister Internship Scheme (PMIS) is a Government of India initiative aimed at providing internship opportunities to youth in top companies of India. Targets under the PMIS constitute one of the compliance parameters under the PFC's MoU with Ministry of Power for FY2025-26. Your Company has complied with the applicable provisions and requirements of the PMIS during FY2025-26.

10. Subsidiaries A. REC Limited

Your Company is the promoter and holding company of REC, holding 52.63% of the paid-up equity share capital of REC. REC is a Systemically Important NonDeposit Accepting Non-Banking Financial Company (NBFC) registered with the Reserve Bank of India (RBI) as an Infrastructure Finance Company (IFC).

REC's business operations encompass financing across the entire power sector value chain, including generation, transmission, and distribution as well as emerging areas such as renewable energy and sustainable infrastructure. REC also finances to the non-power infrastructure sectors such as roads and highways, railways, airports, ports etc.

During FY2025-26, REC recorded a total income of 159,187 crore, compared with 155,980 crore in FY2024-25. The Company reported a net profit of 116,282 crore during FY2025-26, as against 115,713

crore in the previous financial year, reflecting continued growth and strong financial performance.

The Hon'ble Finance Minister, in the Union Budget for FY2026-27 proposed to restructure Power Finance Corporation and REC Limited in order to achieve scale and improve efficiency in the Public Sector NBFCs. The merger process is underway.

The detailed operational and financial performance of REC is available on its website i.e. www.recindia.nic.in

The following subsidiaries of REC as on March 31, 2026 are also subsidiaries of PFC:

i.    REC Power Development &Consultancy Limited

ii.    Chandil Transmission Limited

iii.    Dumka Transmission Limited

iv.    Mandar Transmission Limited

v.    Koderma Transmission Limited

vi.    Luhri Power Transmission Limited

vii.    Shongtong Power Transmission Limited

viii.    Kankani Power Transmission Limited

ix.    Tuticorin Power Transmission Limited

x.    Mekhali Power Transmission Limited

xi.    Sharavathi Power Transmission Limited

xii.    Hampapura Power Transmission Limited

xiii.    Ryapte Power Transmission Limited

xiv.    Robertsganj Power Transmission Limited

xv.    Jalna Power Transmission Limited

xvi.    Sakoli Power Transmission Limited

xvii.    Kempegowda Power Transmission Limited

PFC Consulting Limited, a wholly owned subsidiary of your Company is designated by Ministry of Power (MoP) as the 'Bid Process Coordinator' for Independent Transmission Projects.

Subsidiaries for development of ITP'S: As on March 31, 2026, the following subsidiaries of PFCCL are also subsidiaries of PFC:

1.    Chhatarpur Transmission Limited

2.    Siot Transmission Limited

3.    Joda Barbil Transmission Limited

4.    Ramkanali B Panagarh Transmission Limited

5.    Gola B -Ramgarh B Transmission Limited

6.    Bhuj II Transmission Limited

7.    Bhadla and Bikaner Complex Transmission Limited

8.    Bhuj ICT Transmission Limited

9.    Wahipora and Sallar Transmission Limited

10.    Kandla Gha Transmission Limited

11.    Kakinada I Transmission Limited

12.    NES Navi Mumbai Transmission Limited

13.    Kurnool IV REZ Power Transmission Limited

14.    Raigad Power Transmission Limited

15.    Alibag Power Transmission Limited

16.    Nergs III Siang Basin Transmission Limited

17.    Tumkur II RE Transmission Limited

18.    Latur REZ Transmission Limited

C.    PFC Infra Finance IFSC Limited (PIFIL)

PFC Infra Finance IFSC Limited (PIFIL) was incorporated on February 11,2024, as a wholly owned subsidiary of Power Finance Corporation Limited (PFC). Established at Gujarat International Finance Tec-City (GIFT City), Gujarat, PIFIL is the first Government-owned Finance Company in the International Financial Services Centre (IFSC) ecosystem dedicated to financing power and infrastructure projects in India and overseas in foreign currency, as permitted by the International Financial Services Centres Authority (IFSCA).

The IFSC platform provides access to global capital, financial markets, and international expertise, enabling PIFIL to offer innovative and efficient financing solutions to a diverse clientele comprising both public and private sector entities. The Company commenced its lending operations on April 27, 2026, marking a significant milestone in its journey with the successful execution of its first lending transaction.

PIFIL is strategically positioned to play a pivotal role in financing power and infrastructure projects globally, with a strong emphasis on supporting energy transition initiatives and sustainable infrastructure development. Through its operations, PIFIL aims to strengthen PFC's global presence while contributing to the development of GIFT IFSC as a leading international financial hub.

D.    PFC Projects Limited (PPL)

PFC Projects Limited (PPL), formerly Coastal Karnataka Power Ltd., was established as a wholly owned subsidiary of PFC for developing an Ultra Mega Power Project in Karnataka. In 2022, its name and charter were amended to allow participation in Lenders' Backed Resolution Plans (LbRP).

As the Company had ceased business operations and no future business activities were envisaged, the Board approved the proposal for striking off its name from the Register of Companies under the provisions of Sections 248 to 252 of the Companies Act, 2013.

The Registrar of Companies struck off the name of PFC Projects Limited from the Register of Companies with effect from June 01, 2026, and the Company stood dissolved from that date.

E. Other Subsidiaries established for development of UMPP'S:

In view of the country making energy transition from fossil to non-fossil fuel, it was deliberated in MoP to close the UMPPs. MoP vide its letter dated 27.11.2025 accorded approval for the closing down all the UMPP SPVs except Orissa Integrated Power Limited and Coastal Tamil Nadu Power Limited. As on March 31, 2026 following are the subsidiaries established for UMPP:

1.    Orissa Integrated Power Limited

2.    Coastal Tamil Nadu Power Limited

3.    Deoghar Mega Power Limited*

4. Cheyyur Infra Limited*

5. Deoghar Infra Limited*

6.    Bihar Infrapower Limited*

7. Bihar Mega Power Limited

8.    Jharkhand Infrapower Limited*

*Subsequent to March 31, 2026 Register of Companies struck off the Companies under section 248 to 252 of Companies Act, 2013

11. Building Resilience: Our Multi-Layered Risk Approach

i. Asset Liability Management

Your Company has implemented a comprehensive and robust Asset Liability Management (ALM) Policy, aligned with the Reserve Bank of India (RBI) guidelines. The policy is designed to ensure focused and proactive management of liquidity and interest rate risks as follows:

Risk Monitoring Methodologies:

1.    Liquidity Risk: Monitored using the cash flow approach to assess the timing of cash inflows and outflows.

2.    Interest Rate Risk: Measured through traditional gap analysis, as prescribed by the RBI guidelines.

Aforesaid analysis is made on periodical basis in various time buckets and is used for critical decisions regarding the time, volume and maturity profile of the borrowings and creation of mix of assets and liabilities in terms of time period (short, medium and long-term) and in terms of fixed and floating interest rates. The details of the asset liability management maturity pattern are given at Note No. 53.1 of the Notes to Accounts of the Standalone Financial statements forming part of this Annual Report.

ii.    Foreign Currency Risk Management

The Company has established a comprehensive "Policy for Management of Risks on Foreign Currency Borrowings" to identify, assess, and mitigate risks arising from foreign currency exposures. In line with this framework, the Company actively manages exchange rate and interest rate risks associated with foreign currency borrowings through appropriate hedging instruments, including forwards, options, and swaps.

As at March 31, 2026, the Company's total outstanding foreign currency liabilities stood at USD equivalent 10,302 million, comprising borrowings denominated in USD 6,332 million, JPY 344,288 million, EUR 1,421 million, and GBP 135 million. Out of the total foreign currency borrowing portfolio 97% is hedged i.e. USD eqv 10,027 mn. Also, 98% of the foreign currency portfolio with residual maturity up to 5 years is hedged.

iii.    Information Security Risk Management

Information is an asset to PFC and Information Security (IS) solutions are implemented to protect these assets in order to achieve organisational goals. The purpose of the Information Security (IS) is to provide controlled access to sensitive information only to legitimate, authorised and authenticated users. With the implementation of Information Security & Risk Management mechanism the data Confidentiality, Integrity & Availability (CIA) is ensured through proactive risk assessments such as VAPT activities, Quarterly Risk Register review, regular patching, system updates, policy updates & implementation, SoPs, preventive maintenance activities, regular system reviews etc

iv.    Integrated Enterprise Wide Risk Management

To effectively identify, assess, and mitigate risks, the Company has established an Integrated EnterpriseWide Risk Management Policy (IRM Policy). For the effective implementation and oversight of the policy, the Company has constituted a Risk Management Committee.

Under the IRM Policy, the Company has identified significant risk parameters arising from its business operations, business model, and the use of financial instruments. These parameters encompass a wide spectrum of risks, including operational, financial, market, and regulatory risks, among others. The identified risks are periodically assessed and monitored to ensure timely mitigation and effective risk management.

Further, the Company maintains a comprehensive risk register, which acts as a centralised repository of relevant information pertaining to identified risks, their potential impact, mitigation measures, and ongoing monitoring mechanisms.

12. Catalysing Power Sector Reforms: Our Government Partnership

I. Revamped Distribution Sector Scheme (RDSS) & Integrated Power Development Scheme (with Restructured Accelerated Power Development and Reform Programme (R-APDRP) subsumed in it)

The Company is involved in various GoI programmes for the power sector including acting as the Nodal Agency for operationalisation and implementation of Revamped Distribution Sector Scheme (RDSS) launched by Govt. of India in July, 2021. PFC was also the designated nodal agency for operationalisation of IPDS and R-APDRP Schemes. Both of the Schemes have been Sunset in March, 2022.

Revamped Distribution Sector Scheme (RDSS)

MoP/GoI launched the "Revamped Distribution Sector Scheme (RDSS) - A Reforms-based and Results-linked, Distribution Sector Scheme" injuly 2021 to improve the operational efficiencies and financial sustainability of DISCOMs, by providing financial assistance to DISCOMs for upgradation

of the Distribution Infrastructure and Prepaid Smart Metering & System Metering based on meeting pre-qualifying criteria and achieving basic minimum benchmarks in reforms. PFC and our subsidiary REC are the designated nodal agencies for operationalisation of the Scheme, as per RDSS guidelines and directions of interministerial Monitoring Committee/MoP from time to time.

Nodal agencies are eligible for 0.5% of the sum total of the Gross Budgetary Support (GBS) component of the various projects approved by Monitoring Committee as its fee. PFC is the nodal agency for 17 States/UTs under the Scheme. The Scheme has an outlay of 13,03,758 crore with an estimated gross budgetary support of 197,631 crore from the GoI. RDSS also envisages electrification of balance/left-out households. The implementation period of the Scheme was 5 Years (FY2021-22 to FY2025-26). To ensure achievement of Scheme objectives and to facilitate the completion of remaining scheme components, MoP vide OM dated 16.07.2025 has extended the Sunset date of RDSS Scheme by 02 years upto 31.03.2028.

Financial Assistance under RDSS:

For States allocated to PFC, projects for loss reduction (including household electrification works) and smart metering have been sanctioned for 24 Distribution Utilities across 13 States. Details as on 31.03.2026 are tabulated below (amount in 1 crore):

Role of PFC in the implementation of RDSS Scheme and other activities/ Initiatives:

The wide range of activities being performed by PFC under RDSS and for other allied Schemes of GoI are listed below:

Core Activities for RDSS

•    Overall facilitation and Programme management including appraisal of projects, quality monitoring, monitoring compliance of scheme guidelines, resolving queries of DISCOMs, coordination with MoP/CEA etc.

•    Annual result evaluation framework of DISCOMs including monitoring of regulatory

parameters e.g. subsidy accounting, Govt. dues, analysis of tariff orders, analysis of sales data etc.

•    Capacity building/training programme for skills development of DISCOMs' employees under RDSS by engaging NPTI. Till Mar, 2026; 860 training programmes were conducted through NPTI, DISCOM institutes and other agencies covering around 24,000 DISCOM personnel.

•    MoP has also designated PFC to evaluate additional borrowing proposals for the States (allocated under RDSS) under Additional Borrowing Scheme for FY2025-26 and has recommended additional borrowing proposals of States to MoP.

Supporting Activities for RDSS/allied

programmes of GoI/other Concurrent Activities

•    Counterpart funding - PFC is supporting the counterpart (CP) funding @ 40% (10% for special category States) of the project cost for Loss Reduction (LR) projects under RDSS. PFC has so far sanctioned CP loans of 118,039 crore and disbursed 14,339 crore for LR works under RDSS. To support the RDSS Programme of GoI, PFC is offering special interest rate to DISCOMs for RDSS CP loans. In addition, PFC is also extending interim loans to DISCOMs in case of any paucity of GoI funds, to maintain adequate fund flow for project implementation (Sanctioned 119,016 crore and Disbursed 14,741 crore).

•    Implementation of Smart Distribution Network pilot projects in selected cities across India.

•    Ensuring Household electrification for remotest corner of the Country - Sanction and monitoring of electrification of over 80,000 Particularly Vulnerable Tribal Groups (PVTG) households (PFC States) under PM JANMAN Programme and more than 1 lakh identified households; 3,400+ public institutions under DA-JGUA Scheme being funded under RDSS.

•    Facilitation with DISCOMs for Projects covered under PM-KUSUM; PM-AJAY; PM Surya Ghar Yojana; Border area electrification; left-out household electrification; supply to BSNL Telecom towers in remote areas; monitoring of Ease of Living (EoL) parameters; monitoring with DISCOMs & Oil Marketing Companies (OMCs) to facilitate early release of pending EV charging connections etc.

•    PFC has supported States by preparing Model Bidding Documents for Automation and ERP projects under RDSS; monitoring of implementation of SCADA systems; developing National SCADA Resource Centre (NSRC); development of Integrated web portal for various government Schemes including RDSS; tie-up with multilateral agencies viz. KfW for funding under RDSS and FCDO etc. for training & capacity building of DISCOM personnel

•    PFC was instrumental in development of Digital Utility Manager (DUM) training programme to enhance the skills of power sector professionals and utility employees in adopting emerging digital technologies. This self-paced course was made available on the iGOT Karmayogi Portal and is designed to help professionals stay competitive and resilient amidst the evolving energy transition. The programme consists of 16 key modules covering a wide range of topics. The efforts of RDSS Unit was duly recognised by MoP and over 1.50 Lakh learners have been enrolled on the iGOT Portal for the course and over 1 lakh learners have been certified on the module(s). Efforts are underway for deep diving into few modules for the benefit of the professionals.

Impact of RDSS in Power Distribution Sector

The impact of various regulatory as well as corporate governance related reform measures being implemented in the distribution Utilities (interalia including RDSS), have shown desired results:

•    Positive PAT on accrual basis achieved for the first time at All India level for FY25

•    Reduction in Average AT&C loss of distribution utilities in country from 22.3% in FY21 to 15.04% in FY25.

•    The ACS-ARR Gap of distribution utilities in country has also reduced from ~1 0.90 per unit in FY21 to 1 0.06 per unit in FY25.

•    Tariff orders are being issued regularly.

•    Regular submission of Quarterly accounts by DISCOMs.

•    Timely payments of subsidy and Govt. department dues by State Governments have also contributed to reduction of ACS-ARR Gap.

•    Scheme also places strong emphasis on enhancing consumer satisfaction with improvement in service quality, leading to increased consumer trust and loyalty.

ii. Late Payment Surcharge Rule, 2022

Ministry of Power notified "The Electricity (Late Payment Surcharge and Related Matters) Rules, 2022" (LPS Rules) for settlement of outstanding dues of Generating Companies, Inter-State Transmission Licensees and Electricity Trading Licensees. PFC being nodal agency responsible for all the activities related to implementation of the rules including regular review and monitoring.

For operationalisation of rules, PRAAPTI Portal (developed and managed by PFC Consulting Ltd.) acts as an information portal wherein suppliers enter invoice details and DISCOMs update the corresponding payment information to ensure invoice and payment tracking of power bills in the country. With the implementation of LPS Rules, remarkable improvement has been seen in recovery of outstanding dues of suppliers including Generating Companies, Transmission Companies and Traders. Against legacy dues of 11,39,947 crore as on June 03, 2022, 13 States/UTs have paid instalment of 11,39,077 crore (47 EMIs) upto June 2026 i.e. 99% of total legacy dues. Further, 20 States/UTs reported to have no outstanding dues as on June 03, 2022. Now the legacy dues (overdues) have reduced from 11,39,947 crore to 11,39,077 crore and as on date there is no default in payment of instalments for legacy dues by States. In view of provision of regulation under LPS Rules, the Distribution companies are paying their current dues in time. Since implementation of the rule, as on June 02, 2026, total bills amounting to 118,62,999 crore have been settled against total billed

amount of 119,29,855 crore from May 2022 (excluding EMI payments against legacy dues and including disputed invoices).

iii.    Smart Metering

PFCCL is handling projects on implementation of Advanced Metering Infrastructure (AMI) for state DISCOMs which includes procurement of Smart Meters, AMI Communication System, Back-End IT System, Meter Data Management System (MDMS), integration of Head End System (HES) with MDMS and MDMS with existing DISCOM applications, Data Analytics, capacity building of DISCOMs Manpower, Facility Management Services (FMS) of the complete system and handover of the System to DISCOMs. PFCCL is undertaking implementation of Smart Metering for about 7.11 lakh consumers in the following States/UTs:

a.    Shimla & Dharamshala Towns of Himachal Pradesh for about 1.51 lakh consumers under IPDS Scheme of Govt. of India. The Smart Meters have been successfully commissioned and are in operation.

b.    UT of Puducherry for about 4.07 lakh consumers under RDSS Scheme of Govt. of India. The project implementation activities are in progress and Operational Go-Live of the project was successfully achieved on 31.3.2026.

_ c. State of Tamil Nadu for 1.25 lakh consumers

^m    under RDSS Scheme of Govt. of India. The

project implementation activities would commence shortly

d. UT of Lakshadweep for about 28000 consumers under RDSS Scheme of Govt. of India. DPR for the project has been prepared and is expected to be approved by MoP shortly.

iv.    Independent Transmission Projects (ITPs)

Ministry of Power has also initiated Tariff Based Competitive Bidding Process for development and strengthening of Transmission system with an objective to promote competitive procurement of transmission services and encourage private investments in transmission lines.

Ministry of power appoints Bid Process Coordinator (BPC) for transmission projects. The BPC undertakes preliminary survey work, identification of route, preparation of survey report, initiation of process of land acquisition for sub-stations, if any, initiation of process of seeking forest clearance, if required and bidding process for selection of the developer for the project.

During the FY2025-26, PFC Consulting Limited, being Bid Process Coordinator (BPC) has incorporated 13 SPVs: 8 for inter-state and 5 for intra-state projects.

Further, during the FY2025-26, following SPVs established for development of transmission projects have been transferred to the successful bidders selected through TBCB

1.    MEL Power Transmission Limited

2. Raghanesda RE Transmission Limited

3. NER Expansion Transmission Limited

4.    Angul Sundargarh Transmission Limited

5.    Mandsaur I RE Transmission Limited

6.    Vindhyachal Varanasi Transmission Limited

7.    KPS III HVDC Transmission Limited

8.    Morena I SEZ Transmission Limited

9.    SR and ER Power Transmission Limited

10.    Saswad Transmission Limited

11.    NES Pune East New Transmission Limited

12.    NES Dharashiv Transmission Limited

13.    Wagdari Transmission Limited

14.    South Kalamb Power Transmission Limited

13. Other Major Investments

i.    PTC India Limited

PTC India Limited (PTC) was jointly promoted by Power Grid, NTPC, NHPC and PFC. PFC has invested 112 crore in PTC which is 4.05% of PTC's total equity. PTC is the leading provider of power trading solutions in India, a Government of India initiated public-private partnership, whose primary focus is to develop a commercially vibrant power market in the country.

ii.    Power Exchange India Limited

Power Exchange India Limited (PXIL), India's first institutionally promoted power exchange, provides an innovative, transparent, and credible platform for the development of the Indian power market. PXIL operates a nationwide electronic trading platform that facilitates efficient power trading while enabling simultaneous power transmission clearance, ensuring a transparent, neutral, and seamless market mechanism.

PXIL offers a diverse range of market products, including Day Ahead, Day Ahead Contingency, Any Day, Intra-Day, and Weekly Contracts. In addition, it provides a dedicated trading platform for Renewable Energy Certificates (RECs), thereby supporting the growth of renewable energy markets in the country.

As on March 31,2026, PFC's investment in the equity share capital of PXIL stood at 16.48 crore, compared with 15.06 crore as on March 31,2025.

iii.    ENERGY EFFICIENCY SERVICES LIMITED

Energy Efficiency Services Limited (EESL) was incorporated on December 10, 2009, as a joint venture promoted by Power Grid, NTPC, REC, and PFC, with

each promoter initially holding an equal 25% equity stake. The Company was established to implement and promote energy efficiency projects in India and overseas, supporting the country's transition towards sustainable energy practices.

As on March 31, 2026, the combined shareholding of PFC and its subsidiary, REC Limited, in EESL stood at 21.49%.

iv.    NHPC LIMITED

PFC has initially invested 26,05,42,051 equity shares of NHPC Limited at the rate of 121.78 per share (including securities transaction tax, brokerage and other charges) amounting to 1567.49 crore in April 2016 during disinvestment by GoI through offer for sale route. PFC has sold 15,78,62,576 number of equities shares till March 31, 2026. As on March 31, 2026 PFC holds 10,26,79,475 shares of NHPC Limited valued at 1 756.95 crore (1 73.72 per share). NHPC has reported profit after tax of 13617.80 crore for the FY2025-26 as compared to Profit after Tax of 13,083.98 crore for FY2024-25. During FY2025-26, the Company received dividend income amounting to 119,61,17,797.

v.    COAL INDIA LIMITED

PFC has invested 1,39,64,530 equity shares of Coal India Limited at the rate of 1358.58 per share (including securities transaction tax, brokerage and other charges) amounting to 1500.74 crore in February 2015 through offer for sale route. As on March 31, 2026, PFC holds 1,39,64,530 equity shares of Coal India Limited Valued at 1 629.03 crore (1450.45per share). CIL has reported profit after tax of 1 18,863.93 crore for the FY2025-26 as compared to Profit after Tax of 1 17,016.56 crore for FY2024-25. During FY2025-26, the Company received dividend income amounting to 136,86,63,593.

14. Initiatives for Monitoring Discom's Performance

i. Annual Integrated Rating of Power Distribution Utilities

As part of the power sector reform initiatives, the Ministry of Power has instituted an Integrated Rating Framework to assess the performance of power distribution utilities across the country. The primary objective of the Integrated Rating exercise is to grade all utilities in the power distribution sector based on their financial performance and their ability to sustain the performance over time. Private Distribution Utilities and Power Departments are also included to provide complete sectoral coverage.

The rating framework objectively evaluates the performance of distribution utilities across various parameters broadly classified under i) Financial

Sustainability ii) Performance Excellence and iii) External Environment. For Power Departments, a subset of metrics with modified weightages has been adopted from the overall methodology to ensure relevance and fairness in assessment.

The ratings were carried out by Deloitte Touche Tohmatsu India LLP, a reputed consulting firm, and were co-ordinated by your Company. These ratings serve as valuable diagnostic tools in the hands of the State Governments as well as Utilities to leverage their strengths and address areas requiring improvements so as to improve their operational efficiency and financial sustainability.

The Fourteenth Integrated Ratings for FY2024-25, covering 65 power distribution utilities across the country, were released by the Hon'ble Union Minister of Power and Housing & Urban Affairs on January 23,2026.

ii.    Annual Performance Report of Power Utilities

PFC has been publishing the Report on Performance of Power Utilities annually. The Report covers State Power Utilities in all states and UTs and major private distribution companies, offering a comprehensive insight into the Indian power sector. The Report covers a range of key financial and operational parameters such as profitability, gap between average cost of supply and average revenue, net worth, receivables, payables, AT&C losses and consumption pattern of the sector at utility, state and national level. The Report is part of PFC's effort to provide a reliable database on the performance of power utilities offering critical inputs for policy interventions and monitoring the progress of various GoI schemes in the power sector. The Report for FY2024-25 has been published in February 2026.

iii.    Categorisation of Utilities

For purposes of funding, your Company classifies State Power Generation and Transmission entities into A++, A+, A, B, C and D categories. The categorisation (biannually) of State Power Generation and Transmission entities is arrived based on the evaluation of entity's performance against specific parameters covering operational & financial performance including regulatory environment, availability of audited accounts, etc. as per categorisation policy.

With respect to State Power Distribution entities (including PDs/entities with integrated operations), your Company's categorisation policy provides for adoption of MoP's Integrated Ratings by aligning such ratings/grading with PFC's standard categories of A+, A, B, C and D.

The categorisation of Borrowers in the Logistics and Non-Power Infrastructure sector is carried

out considering the strengths and weaknesses of the project.

The categorisation enables PFC to determine pricing of loans and stipulation of security to the state power entities.

15. Right to Information: Empowering Citizens through Transparent Communication

The Right to Information Act, 2005 (RTI Act)

provides citizens with a statutory framework to access information held by public authorities, thereby promoting transparency, accountability, and good governance in public administration. The Act reinforces the principles of openness and responsible decision-making by enabling citizens to seek information on matters concerning public authorities, subject to the exemptions prescribed under the Act.

The RTI Act serves as an important instrument for enhancing transparency in the functioning of public authorities, fostering accountability of public officials, and empowering citizens to participate more effectively in the democratic process. It has strengthened public oversight by facilitating informed engagement from citizens, civil society, journalists, and other stakeholders on matters of public interest. The preamble of the RTI Act notes to secure access to information under the control of public authorities, in order to promote transparency and accountability in the working of every public authority. The information seekers, have, subject to few exceptions, an overriding right under the Act, to get information lying in the possession of the Public Authorities.

PFC has set up an elaborate mechanism to deal with requests received under the RTI Act, 2005. PFC has implemented the RTI Act to provide information to the citizens of India and also to maintain accountability and transparency in the working of the Company. The Company has designated a Public Information Officer (PIO) and a First Appellate Authority-RTI (FAA-RTI) at its registered office for effective implementation of the RTI Act. The relevant information/disclosures are also made available on the official website (www.pfcindia. co.in) of the Company. During the period from April 01, 2025 to March 31, 2026, all 125 applications received under the RTI Act, were duly processed and replied to. PFC has also complied with the requirement of filing of online RTI Quarterly Returns on the portal of Central Information Commission (CIC) during the said period.

Further, in order to strengthen compliance of the provisions of disclosures as contained in Section 4 of the RTI Act, 2005, Department of Personnel & Training

(DoPT) vide its OM No. 1/6/2011-IR dated 15.04.2013 issued guidelines on the following:-

(i)    Suo moto disclosure of more items under Section 4;

(ii)    Guidelines for digital publication of proactive disclosure under Section 4;

(iii)    Guidelines for certain clauses of Section 4(1)(b) to make disclosure more effective;

(iv)    Compliance mechanism for suo-moto disclosure (proactive disclosure) under RTI Act, 2005.

In compliance of the aforesaid Guidelines, PFC has placed the requisite information on the website of the Company.

Besides the above, PFC is also linked with the online RTI Portal of Govt. of India, Department of Personnel & Training fht.t.ps://rt.ionline.gov.in). which enables citizens of India, to file RTI applications/first appeals online along with payment gateway. Payment can be made through internet banking of SBI & its associate banks, debit/credit cards of Master/Visa and RuPay cards.

16. Corporate Social Responsibility - Driving Social Progress

PFC has formulated its CSR Policy in line with Section 135 of the Companies Act, 2013 and the Companies (CSR) Rules, 2014 (as amended from time to time) and DPE guidelines issued from time to time. The aim of PFC's Corporate Social Responsibility Policy (CSR Policy) is to ensure that the Company becomes a socially responsible corporate entity committed to improving the quality of life of society at large by undertaking projects for Sustainable Development, mainly focusing on Health, Education and Energy needs of the society. To oversee the activities of CSR, PFC has in place a Board level CSR Committee of Directors headed by an Independent Director. Every year CSR Annual Action Plan and Budget are recommended by CSR Committee and approved by the Board. Third party impact assessment agencies are being engaged to assess the benefit/outcome of the projects.

PFC has implemented wide range of activities throughout the Country in the field of Environment Sustainability, Healthcare, Education, PM Internship, Rural Development, contribution to Swachh Bharat Kosh and other areas as specified under Schedule VII of the Companies Act, 2013.

The CSR Report under Companies (CSR Policy), Rules is annexed herewith.

17. Investing in our People: Training & Development

PFC regards sustained investment in the capabilities of its people as fundamental to the achievement of its strategic objectives and to retaining its competitive edge. During FY2025-26, the emphasis remained on customised, need-based programmes designed to build specific competencies aligned with corporate priorities.

Functional and Domain-Specific Programmes

In-house programmes spanned a wide spectrum of functional areas, including Financial Derivatives (Swaps and Bond Forwards); Anti-Money Laundering (AML), Know Your Customer (KYC) and Combating the Financing of Terrorism (CFT); the application of Artificial Intelligence and emerging technologies for Preventive Vigilance; the evolving regulatory landscape for PSUs; the Conduct, Discipline & Appeal (CDA) Rules of PFC; Record Management; Advanced MS Excel and MS Word; Reservation Guidelines (SC/ST/OBC); and Communication Skills, besides an orientation programme for new recruits. A field visit to the NTAMC GIS facility at Manesar offered employees first-hand exposure to advanced grid-management infrastructure.

External Programmes

Complementing these efforts, employees were sponsored to external programmes on the Foreign Exchange Market, Risk-Based Internal Audit, Financial Modelling for Project Finance, Cyber Security, Business Responsibility and Sustainability Reporting (BRSR) and public procurement through the GeM Portal, along with other need-based interventions.

Behavioural and Well-being Initiatives

Recognising that well-being and teamwork are integral to sustained performance, PFC organised an Outbound Experiential Learning Programme together with a team-building visit to the Tehri Dam, observed International Yoga Day, and conducted workshops on Stress Management and Lifestyle Disease Management.

Statutory and Compliance-Oriented Training

An Awareness Workshop on the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 was held, along with a dedicated session for members of the Internal Committee. Training on Fire & Disaster Management and Internal Auditor training on the ISO 9001:2015 and ISO 45001:2018 standards were also imparted.

Induction and Industry Exposure

All fresh recruits of PFC attended the Foundation Course of the National Power Training Institute (NPTI), covering the Basics of the Power Sector, Renewables & Solar Energy, Government Schemes, Energy Transition, Energy Conservation & Energy Efficiency, SCADA and Project Appraisal, among other subjects. Employees were further encouraged to participate in sectoral conferences such as the India Power and Renewable Conference and the Net Zero Power Summit, promoting continuous learning and exposure to industry developments.

Leadership Development

With a view to strengthening the leadership pipeline, a General Management Programme was organised for employees due for promotion, equipping them for higher responsibilities, while senior executives were nominated to mandatory Leadership Development Programmes at the Indian Institute of Management, Calcutta.

Training Performance during the Year

As of March 31, 2026, Twenty Six (26) in-house training programmes were organised for employees, and a total of 2,377 training man-days was achieved through in-house programmes and programmes conducted by external training agencies.

18. Employee Engagement 2025-26

a)    PFC celebrated National Sports Day with great enthusiasm and active participation from employees. The event began with the Fit India Pledge, reaffirming PFC's commitment to promoting health, fitness and overall well-being.

To add energy and enjoyment to the occasion, a range of activities were organized for both men and women across various age groups. The events were lively, engaging and filled with team spirit, bringing employees together in the true spirit of sportsmanship. At PFC, we believe that physical fitness forms the foundation for personal well-being and collective excellence, and this celebration truly reflected that ethos.

b)    Inter CPSU sports competition details - 125 employees participated in PSCB sports like Athletics, Badminton, Bridge, Carrom, Chess, Cricket, Football etc. during FY2025-26.

c)    During FY2025-26, PFC organized 29^th Inter CPSU Bridge Tournament under the aegis of Power Sports Control Board (PSCB).

d)    PFC celebrated its Foundation Day for its employees & their family member on July 16, 2025 at Bharat Mandapam, New Delhi.

e)    Celebration of various days like Rashtriya Ekta Diwas Celebration, 150 years of Vande Mataram, Celebration of Constitution Day.

f)    Every year, PFC celebrates various occasions such as festival of Diwali, New Year etc. to encourage a feeling of togetherness among the employees.

19. Employee Well-being

Health camps: PFC continued its focus on employee well-being through a series of health camps conducted in collaboration with leading healthcare institutions, such as:

•    Health Check-up Camps, workshop etc. were organized offering a range of diagnostic services including ECG, PFT, BP and sugar tests, along with dental screening and gynaecologist consultations.

•    Voluntary Blood Donation Camp was organized wherein employees participated wholeheartedly for the noble cause.

•    Panel Discussion organized on Women Health (with special focus on cancer)

Talent Management: Your Company remains committed to building a future-ready workforce through continuous learning, leadership development and employee engagement. The talent management strategy is designed to attract, develop and retain high-caliber professionals capable of supporting the Corporation's evolving business requirements and long-term growth objectives.

During FY2025-26, the Company continued to attract talented professionals from reputed institutions and professional bodies, thereby strengthening its human capital base. A total of 31 executives

joined the organisation during the year. Structured onboarding and induction initiatives were conducted to facilitate seamless integration of new employees into the organisation. These programmes provided participants with insights into the Company's business operations, policies, processes and strategic priorities.

The Company accorded significant importance to capability building and professional development. Employees were encouraged to enhance their functional, managerial and leadership competencies through a diverse range of learning and development interventions. The Company's E-Learning Scheme continued to provide employees with access to self-paced learning opportunities through reputed digital learning platforms. Leadership development initiatives and competency enhancement programmes were undertaken across various levels of the organisation to strengthen managerial effectiveness, build future leadership capabilities and support career growth.

Recognising the importance of employee experience in organisational success, the Company continued to undertake employee engagement surveys and feedback assessments to understand employee perspectives and strengthen organisational effectiveness.

The effectiveness of the Company's people practices is reflected in its strong employee retention and positive work environment. During FY2025-26, the Company recorded a low voluntary attrition rate of 1.1%, demonstrating its ability to attract, engage and retain talent. Industrial relations remained cordial and harmonious throughout the year, underscoring the dedication of employees and the Company's continued focus on maintaining a constructive and inclusive workplace culture.

iii. Internal Complaints Committee

The company has complied with the provisions relating to the constitution of Internal Complaints Committee (ICC) under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

Disclosures in relation to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013:

21. Corporate Vigilance: A Foundation of Trust

During the FY2025-26, the Vigilance Unit of Power Finance Corporation Limited continued to play a significant role in promoting integrity, transparency, accountability, and ethical governance across the Corporation. The Unit remained focused on strengthening preventive vigilance mechanisms, enhancing systemic improvements, and ensuring adherence to the guidelines issued by the Central Vigilance Commission (CVC).

As part of its preventive vigilance initiatives, the Vigilance Unit conducted regular and surprise inspections across various departments and operational areas of the Corporation. Based on observations and findings, suitable advisories, operational guidelines, and system improvement measures were issued with a view to streamlining procedures, minimising operational vulnerabilities, and reinforcing transparency and efficiency in organisational processes.

The Corporation observed Vigilance Awareness Week (VAW) 2025 from October 27, 2025 to November 02,

2025, in accordance with the directives of the Central Vigilance Commission. The theme for the year, "Vigilance: Our Shared Responsibility", was widely disseminated across the organisation through display banners, digital communication platforms, and awareness initiatives. The observance was aligned with the nationwide campaign launched by the CVC for promoting ethical governance and integrity in public administration. To encourage wider participation and awareness, the Integrity Pledge (e-Pledge) facility was prominently hosted on the Corporation's intranet and official website. Extensive awareness outreach was also undertaken through social media platforms including Facebook, X (formerly Twitter), and Instagram.

During the Vigilance Awareness Week, the Vigilance Unit organized various employee engagement activities such as slogan writing, poetry writing, and pictorial competitions on vigilance and integrity-related themes. These activities witnessed enthusiastic participation from employees at the Corporate Office as well as Regional Offices and helped foster awareness regarding ethical conduct, transparency, and good governance practices.

As a part of the observance, a Borrower Grievance Redressal Portal was also launched as a new initiative aimed at enhancing transparency, accountability, responsiveness, and ease of communication with stakeholders. The Vigilance Unit also undertook detailed examination and investigation of complaints received during the year and ensured appropriate follow-up action in accordance with the prescribed procedures and vigilance guidelines. In continuation of the broader three-month Vigilance Awareness Campaign undertaken in line with the CVC's preventive vigilance initiatives, various sensitisation and capacity-building programmes were organized for employees and stakeholders.

During the FY and VAW following capacity building programmes were organised:

•    One day Seminar on issues related to "Investigation and Reporting" was organised for CVOs of the Power Sector.

•    One day workshop on the topic of "Conduct, Discipline and Appeal Rules of PFC" was organised for newly recruited employees.

•    One day workshop on the topic of "Cyber Hygiene, Awareness and Detecting & Mitigating Digital Financial Frauds through Advanced AI-Driven Countermeasures" was organised for the employees.

•    Workshop on the topic of "Understanding Vigilance Angle" was organised for all the level of employees.

•    A knowledge sharing session on "Awareness on fraud risk management policy in PFC and Borrower Loan Accounting System and its applications".

•    Workshop on "Conduct, Discipline and Appeal Rules of PFC and filling of Annual Property Return".

In addition, outreach and interaction sessions were conducted with vendors of PFC and PFC Consulting Limited (PFCCL) with the objective of promoting ethical business practices, transparency, and vigilance awareness among external stakeholders.

In compliance with the guidelines of the Central Vigilance Commission, sensitive posts within the Corporation were periodically reviewed and officers occupying such positions were rotated to promote objectivity and mitigate vigilance risks. Further, Agreed Lists and Lists of Officers of Doubtful Integrity (ODI) for the year 2025 were prepared in consultation with the Central Bureau of Investigation (CBI) for the Corporate Office at Delhi and Regional Offices at Mumbai and Chennai.

The Vigilance Unit also ensured timely submission of prescribed periodical/statistical returns and reports to the Central Vigilance Commission, Central Bureau of Investigation, and Ministry of Power within the stipulated timelines.

The Vigilance Unit continued to work proactively towards systemic improvements and strengthening of internal controls with a view to enhancing transparency, objectivity, accountability, and efficiency in the Corporation's functioning, thereby contributing to robust corporate governance and organisational excellence.

22. Implememtation of Official Language

PFC accords the highest priority to the promotion and progressive use of Official Language Hindi in its official functioning and remains committed to the effective implementation of the Official Language Policy of the Government of India. In recognition of its exemplary performance, PFC was conferred the First Prize for the best implementation of the Official Language Policy for the period October 01, 2024 to March 31, 2025. This recognition reflects

the Corporation's sustained commitment towards promoting the use of Hindi in its official work.

Continuing its tradition, the Corporation celebrated Hindi Day on September 14, 2025, and observed Hindi Month from September 14, 2025 to October 13, 2025. During the celebration period, the Corporation organized five competitions, one workshop, and one seminar/ conference to encourage employees to enhance and expand the use of Hindi in their day-to-day official work.

During the year, various important programmes and activities were organized by the Corporation for promotion and implementation of Official Language Hindi. The Drafting and Evidence Sub-Committee of the Honourable Parliamentary Committee on Official Language organized a discussion programme with the Chairpersons of the Town Official Language Implementation Committees (TOLICs) of Delhi, Faridabad, Aligarh and surrounding areas and some of their member offices. Further, a meeting of the Hindi Advisory Committee of the Ministry of Power was held during the period.

During the year, inspections regarding implementation of Official Language in the Corporation were carried out by the Ministry of Power at PFC's Regional Office (West), Mumbai, Regional Office (South), Chennai and PFC Headquarters. In addition, the Second SubCommittee of the Parliamentary Committee on Official Language also conducted an inspection of PFC Headquarters regarding implementation of Official Language in the Corporation.

To promote the use of Hindi, a "Prashasanik Shabd Antakshari Pratiyogita" was organized under the aegis of NARAKAAS in which officers from 16 member offices participated. Apart from this, employees of the Corporation won prizes in various competitions organized by TOLIC (Undertaking-1), Delhi, which brought further recognition to the Corporation in the field of Official Language implementation.

A Hindi workshop was organized with a view to developing interest and knowledge in Hindi language among the children of the Corporation's employees, in which a total of 60 children participated. To motivate the Corporation's employees towards Hindi, the book "Raag Bhopali" written by renowned author Shri Sharad Joshi was distributed to all the employees. All these efforts acted as motivational tools for creating possibilities of progressive use of Official Language Hindi in the Corporation.

23. Directors' Responsibility Statement

As required under Section 134(5) of the Companies Act, 2013, it is confirmed that:

a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

b)    such accounting policies have been selected and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the Company for that period;

c)    proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d)    the annual accounts have been prepared on a going concern basis;

e)    internal financial controls have been laid to be followed by the Company and such internal financial controls were adequate and operating effectively;

f)    proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

24. Auditors

i.    Statutory Auditors

M/s Thakur, Vaidyanath Aiyar & Co., Chartered Accountants and M/s Mehra Goel & Co., Chartered Accountants were appointed as Joint Statutory Auditors of the Company for FY2025-26 by the Office of the Comptroller & Auditor General of India.

The Joint Statutory Auditors have audited the accounts of the Company for the FY2025-26 and have given their report without any qualification, reservation or adverse remark or disclaimer. The copy of the audit report is annexed herewith.

ii.    Secretarial Auditor:

Your Company had engaged T. Chatterjee & Associates, Company Secretaries as Secretarial Auditors for FY2025-26. Secretarial Audit Report is annexed herewith.

The observations of the Secretarial Auditor and reply of the management on the observations, for the FY2025-26 along with copy of the audit report is annexed herewith.

iii.    Comments of Comptroller & Auditor General of India

The Comptroller and Auditor General of India (C&AG) has mentioned that on the basis of audit, nothing significant has come to their knowledge which would give rise to any comment upon or supplement to Statutory Auditors' report. The copy of the report of C&AG is annexed herewith.

ii.    Material order

No significant and material orders were passed by any regulator or court or tribunal impacting the going concern status and company's operations during the FY2025-26.

iii.    Adequate system of Internal Control

The Company maintains an adequate system of Internal Control, including suitable monitoring procedures to ensure accurate and timely financial reporting of various transactions, efficiency of operations and compliance with statutory laws, regulations and Company procedures/policies. For details, please refer to the 'Management Discussion and Analysis Report' annexed to this report.

iv.    Report on Corporate Governance

Information on composition, terms of reference and number of meetings of the Board and its Committees held during the year, Whistle Blower Policy, remuneration to Whole time Directors, sitting fees to Independent Directors and details regarding IEPF and web-links for familiarisation programmes of Directors, Policy on Materiality of Related Party Transactions and Dealing with Related Party Transactions, Policy for determining Material Subsidiaries, etc. have been provided in the 'Report on Corporate Governance', prepared in compliance with the provisions of SEBI (LODR) Regulations, 2015 and DPE Guidelines on Corporate Governance, 2010, as amended from time to time, which forms part of this Annual Report.

v.    Presidential Directives

During the last three years, no Presidential Directives were issued to the Company.

However, during FY2026-27, the Ministry of Power, vide its letter dated June 10, 2026, conveyed the approval of the Hon'ble President of India for the proposal to merge REC Limited into PFC, pursuant to the decision of the Board of Directors to reserve the merger proposal for the approval of the Hon'ble President of India.

vi.    Loan, Guarantee and Investment

Pursuant to Section 186(11) of the Companies Act, 2013, loans made, guarantees given, securities provided or investment made by a company engaged in the business of financing of companies or of providing infrastructural facilities in the ordinary course of its business are not applicable to the Company, hence no disclosure is required to be made. Further,

details of investments are appearing at note no.12 of the Notes to Accounts of the standalone financial statements.

vii.    Managerial Remuneration

The provisions of Section 197 of the Companies Act, 2013 and Rules made thereunder relating to managerial remuneration are not applicable to Government companies, therefore no disclosure is required to be made.

viii.    Stock options

The Company has not issued any stock options to the Directors or any employee of the Company during the FY2025-26.

ix.    Cost accounts and records

The Central Government has not prescribed the maintenance of cost records for the Company's products/services under Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014, as amended. Accordingly, the Company is not required to maintain cost accounts and records.

x.    Fraud

During the year under review, neither the statutory auditors nor the secretarial auditor has reported to the audit committee, under Section 143(12) of the Companies Act, 2013, any instances of fraud committed against PFC by its officers or employees.

xi.    Secretarial Standards

The Company is compliant with the applicable Secretarial Standards issued by the Institute of Company Secretaries of India.

xii.    Independent Directors

The Independent Directors of the Company are appointed by the President of India acting through the administrative ministry, i.e., MoP. Accordingly, the appointing authority considers the integrity, expertise and experience of the individual to be appointed. In the FY2025-26, five Independent Directors were appointed on the Board of PFC during the first quarter of 2025.

Further, in the first quarter of FY2026-27 three Independent Directors viz; Smt. Usha Sajeev Nair, Shri Prasanna Tantri and Shri Naresh Dhanrajbhai Kella on completion of their tenures ceased to be Directors on the Board of PFC w.e.f. April 17, 2026.

Shri Bhaskar Bhattacharya tendered his resignation from the position of Independent Director of the Company w.e.f. April 01, 2026 due to his proposed candidature in the West Bengal Assembly election so as to avoid any potential conflict of interest.

xiii.    Conservation of Energy and Technology Absorption

As a financial institution, the Company does not undertake any manufacturing activity and, therefore, the provisions relating to conservation of energy and technology absorption are not directly applicable. Nevertheless, the Company continues to adopt energy-efficient practices, digital technologies and green initiatives in its operations and actively supports the financing of renewable energy and sustainable infrastructure projects, thereby contributing to the nation's clean energy transition.

xiv.    Foreign exchange earnings and outgo

The Foreign exchange outgo for the FY2025-26 aggregated to H 13,620.62 crore. The payments are majorly for the purpose of servicing principal and interest component of foreign currency borrowings and travelling expenses. The Foreign exchange earnings for the FY2025-26 were nil.

xv.    Total expenditure for the FY2025-26 amounted to H 33,767.16 crore as against total expenditure of H 31,955.39 crore in FY2024-25. Out of it, finance cost amounted to H 33,176.92 crore in FY2025-26 as compared to H 30,511.94 crore in FY2024-25. This constituted 98.25 % of total expenses in FY2025-26. During FY2025-26, employee benefit expenses and other expenses were H 280.42 crore and H 162.98 crore respectively against H 266.18 crore and H 165.08 crore respectively in the previous year.

xvi.    M/s. ASA & Associates LLP, Chartered Accountants, appointed for testing adequacy and operative effectiveness of Internal financial control over financial reporting, has certified that the Company maintains an adequate system of internal financial controls, evaluates and makes an assessment of its adequacy and effectiveness in a satisfactory manner which takes care of requirements under Companies Act, 2013.

The Statutory Auditors of the Company i.e. Thakur, Vaidyanath Aiyar & Co., Chartered Accountants and Mehra Goel & Co., Chartered Accountants have

also given their Report on Internal Financial Controls stating that the Company has, in all material respects, internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2026 based on internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India.

xvii.    Annual Return

The Annual Return of PFC for FY2024-25 is available on the link https://pfcindia.com/ ensite/Home/VS/10256 and for FY2025-26 it shall be made available on your Company's website www.pfcindia.co.in

xviii.    Debenture trustees

The details of Debenture trustees appointed by the Company for the different series of Bonds issued by your Company are annexed herewith.

xix.    Insolvency and Bankruptcy Code, 2016

During the year no application has been made or any proceedings pending against PFC under the Insolvency and Bankruptcy Code, 2016. Further, details of the difference between amount of the valuation done at the time of one time settlement and the valuation done while taking loan from the banks or financial institutions, are not applicable.

xx.    Procurement from Micro & Small Enterprises

Government of India has notified Public Procurement Policy for Micro and Small Enterprises (MSEs) Order, 2012 to support marketing of products produced and services rendered by them. In compliance to the policy, annual procurement plan including items to be procured from Micro & Small Enterprises (MSEs) are uploaded on PFC's website for the benefit of MSEs.

The benefits to MSEs like exemption from tender fees and earnest money deposit, purchase preference, interest on delayed payments and exemption from prior experience - prior turnover criteria subject to meeting of quality and technical specifications are also extended to encourage these enterprises.

During the financial year, your Company has made all the payments against invoices of MSE vendors within the prescribed timelines, and invoices of MSE vendors pending for payment beyond prescribed timelines at the end of the financial year is Nil.

During the financial year, your Company has procured products and services from MSEs, which constituted 48.20 % of the total annual procurement value, against the mandate of 25 % set by Ministry of Micro, Small and Medium Enterprises, Government of India. During the year, 386 MSEs were benefited out of which 09 MSEs belonged to SC/ST category and 69 MSEs were owned by women.

PFC is also registered on all five Trade Receivables Discounting System (TReDS) platform (i.e. Receivables Exchange of India Ltd. (RXIL), M1xchange, Invoicemart C2FO) and DTX of CReDX for financing of trade

xxi. Compliance of the provisions relating to the Maternity Benefit Act, 1961

Your Company adheres to the obligations in terms of paid leave and other facilities mandated under the Maternity Benefit Act, hence creating a supportive and equitable workplace environment. Your Company reaffirms its commitment to protecting the rights and well-being of its women employees. In addition to this, to facilitate women employees to take care of the needs of their minor children during their examination, sickness, etc., a provision of Child Care Leave (CCL) is in place for a maximum period of 2 years (730 days) to be availed during their entire service in the Corporation.

27. Information Technology Initiatives

PFC is dedicated to delivering strategic advantage by fostering creative and innovative use of technology to achieve the Corporation's objectives. PFC is

receivables of Micro, Small & Medium Enterprises (MSMEs). TReDS platform facilitates the discounting of invoices of MSMEs leading to prompt generation of working capital for their regular business operations.

Your Company had also organized/participated in 2 vendor development programmes in co-ordination with Ministry of Micro, Small and Medium Enterprises, Government of India to encourage participation of Micro and Small Enterprises.

The details of the procurements made from Micro, Small and Medium Enterprises (MSMEs) during the FY2025-26 and the targets for FY2026-27 as required to be disclosed under Micro, Small and Medium Enterprises Development Act, 2006 along with Public Procurement Policy for Micro and Small Enterprises (MSEs) Order, 2012 is as under: committed to streamlining operations to improve efficiency and optimise resource utilization. PFC's IT Unit promotes effective stewardship of information access and provides a secure, reliable technology infrastructure and quality user services and support to meet the ever-changing business needs. PFC continuously works on improving the existing system while evaluating the industry standard of the technology and tries to adopt the same in the organisation to carry out & support the business operations in the best possible manner. Accordingly, PFC has undertaken several Information Technology (IT) initiatives.

IT Governance Structure:

A robust IT governance structure has been established at PFC to ensure strict adherence to the necessary compliance to the guidelines prescribed by various statutory and regulatory bodies.

IT Strategy Committee (ITSC):

As per the RBI Master Direction on Information Technology Governance, Risk, Controls and Assurance Practices, a Board Level ITSC headed by an Independent Director, has been constituted in PFC to ensure that the IT Strategy aligns with the overall strategy of the organisation towards accomplishment of its business objectives. ITSC has been meeting and deliberating on the strategic IT aspects such as IT Governance, IT Capacity planning, Cybersecurity, Business Continuity etc.

IT Steering Committee:

I n line with the Reserve Bank of India's Master Directions for NBFCs, the IT Steering Committee comprising members at senior management level from IT and business functions have been duly constituted and regular meetings are conducted to oversee the execution of IT Strategy and ensure that necessary IT risk management processes are in place.

Chief Information Security Officer (CISO):

A dedicated CISO office has been set up to ensure rigorous monitoring and enforcement of information security compliance. CISO is driving cyber security strategy and ensuring compliance to the extant regulatory/statutory instructions on information/ cyber security.

Information Security Committee (ISC):

In line with RBI Master Directions, an Information Security Committee (ISC), under the oversight of the ITSC, has been formed for managing cyber/ information security for development of information/ cyber security policies, implementation of policies, standards and procedures to ensure that all identified risks are managed.

Information Security & Risk Management:

I nformation is an asset to PFC and Information Security (IS) solutions are implemented to protect these assets in order to achieve organisational goals. The purpose of the Information Security (IS) is to provide controlled access to sensitive information only to legitimate, authorised and authenticated users. With the implementation of Information Security & Risk Management mechanism the data Confidentiality, Integrity & Availability (CIA) is ensured through proactive risk assessments such as VAPT activities, Quarterly Risk Register review, regular patching, system updates, policy updates & implementation, SoPs, preventive maintenance activities, regular system reviews etc.

Automation of Business Processes & Paperless Office:

PFC remains steadfast in harnessing Information Technology to empower its employees in efficiently fulfilling business functions. Implementation of collaboration tools for online meetings, adoption of an e-Office solution for streamlining file processing, conducting paperless digital board meetings through BoardPac, and enhancing paperless work are among the initiatives undertaken by PFC to improve organisational efficiency through technological utilization.

Digital Transformation & ERP Implementation:

PFC is using host of software applications operating in an integrated environment. Further, PFC has taken up initiatives for a complete digital transformation as per the laid down IT roadmap to adopt state-of-the-art technology which can ensure PFC to adopt the industry best practices & standards. As part of this, PFC is in the process of upgrading to a "Comprehensive Single Stack ERP platform" to ensure end-to-end integration and digitisation of the processes and services.

IT Application Augmentation:

i)    Implementation of Borrower Grievance Portal - an online workflow based system designed to efficiently monitor and ensure faster resolution of Borrower grievances.

ii)    Implementation of Early Warning Signal (EWS) platform for enablement of timely risk mitigation actions, helping safeguard asset quality and reduce credit losses.

iii)    Implementation of Borrower KYC Module and screening of Sanction list as per the regulatory compliance requirements.

PFC Website:

The bi-lingual PFC website is maintained with up-to-date information as per "Guidelines for Indian Government Websites". PFC's Website is face-uplifted to provide more comprehensive information to meet the needs of external stakeholders.

Business Continuity & Disaster Recovery:

A Disaster Recovery (DR) site has been established on a cloud platform, replicating the existing data centre setup in a different seismic zone to seamlessly continue its business operations in the event of a disaster. Further, PFC conducts Disaster Recovery (DR) drills to ensure organisational readiness in the face of unexpected disruptions or disasters. These drills are vital for testing the effectiveness of the DR, identifying potential gaps, and enhancing

the organisation's ability to respond swiftly and efficiently during critical situations. This proactive approach reinforces PFC's commitment to business continuity and operational resilience.

28.    Establishment of Vigil Mechanism

The Company has established a robust vigil mechanism to promote the highest standards of ethical conduct, transparency, accountability, and good corporate governance. The framework is supported by a comprehensive set of policies and codes, including the Fair Practices Code, Code of Conduct, Code for Prevention of Insider Trading, Fraud Prevention Policy, Policy on Related Party Transactions, Public Procurement Policy, Whistle Blower Policy, and other governance policies, as applicable.

These policies provide a structured framework for ensuring compliance with applicable laws and regulations, promoting ethical business practices, and facilitating the reporting and resolution of concerns relating to misconduct, fraud, or unethical behaviour.

The details of the vigil mechanism and the related policies are available on the Corporation's website.

29.    Grievance Redressal

The Company has established a robust Public Grievance Redressal Mechanism to facilitate the prompt and effective resolution of grievances received from the public. The grievance redressal system is supported by designated Nodal Officers who monitor and ensure timely disposal of grievances within the prescribed timelines.

The status of public grievances is available in the public domain through the Corporation's web portal, enabling transparency and easy access to grievance-related information. The relevant link is provided below:

https://pfcindia.com/DocumentRepository/ckfinder/ files/Statutory Requirements/Status of Public Ghevances/PFC%20CPGRAMS%20Report.pdf

To further strengthen transparency, accountability, and service delivery, the Company has also adopted a Citizen's Charter, which outlines its commitment to stakeholders and the standards of service it strives to maintain. The Citizen's Charter is available on the Corporation's website for the convenience of stakeholders.

30.    Statutory and Other Information

Information required to be furnished as per the Companies Act, 2013, Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, DPE's Guidelines on Corporate Governance for CPSEs and other

ACKNOWLEDGEMENT

The Board of Directors are highly grateful for the valuable support, cooperation, and encouragement extended to the Company by the Government of India—particularly the Ministry of Power, Ministry of Finance, Ministry of Corporate Affairs, various State Governments, the Reserve Bank of India, Department of Public Enterprises, NITI Aayog, DIPAM, Securities and Exchange Board of India, National Stock Exchange of India Limited, BSE Limited, Ministry of Micro, Small and Medium Enterprises, and other relevant government departments and agencies at both Central and State levels. Your Directors acknowledge the constructive suggestions received from Auditors and Comptroller and Auditor General of India and are grateful for their continued support and cooperation.

The Board of Directors also extends its gratitude to the Statutory Auditors, Secretarial Auditor, RBI Auditors, and its bankers for their valuable insights, guidance, and continued cooperation.

The Board of Directors further wish to convey their heartfelt thanks to the shareholders, investors, clients, and customers for their steadfast trust and support. The Board also places on record its sincere appreciation for the unwavering commitment, dedication and invaluable contributions of all members of the PFC family, whose collective efforts have enabled the Company to sustain its growth and continue creating long-term value for its stakeholders.