India's state-owned Power Finance Corporation Ltd (PFC) has refused to lend money to Shapoorji Pallonji Group, threatening the infrastructure group's plan to refinance its nearly 200 billion rupees ($2.4 billion) of debt, a senior official said.

“We have rescinded our loan to Shapoorji Pallonji,” Power Finance Corporation (PFC) chairman and managing director Parminder Chopra told analysts in a call on Friday. She said PFC had done due diligence and found that this was a new sector for the government-backed company and it would not be easy to provide funding.

“Ultimately, the board decided not to approve loans worth about Rs 20,000 crore,” he told Bloomberg News on Saturday.

The group, controlled by Indian billionaire Shapoor Mistry, had earlier approached Power Finance for a loan. The loan amount was to be used primarily to refinance an old credit facility. Now with this new move, the company may have to look for new avenues to raise funds.

Mumbai-based Afcons Infrastructure Ltd, the engineering and construction arm of the Shapoorji Pallonji Group, recently raised money by selling new shares. In this IPO, founder Goswami Infratech Private Limited sold shares worth Rs 41.8 billion, which helped meet the company's funding needs.