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Power sector companies have requested banks to urge the RBI to allow a special dispensation for power sector loans and asked the government to address the adverse issues faced by them quickly, said one of the bankers who attended the meeting. Photo: Mint
Power sector companies have requested banks to urge the RBI to allow a special dispensation for power sector loans and asked the government to address the adverse issues faced by them quickly, said one of the bankers who attended the meeting. Photo: Mint

Govt sets up panel to look into demands of power producers

The committee headed by S.B. Nayar, chairman of IIFCL, has been asked to present its report by 7 Nov

New Delhi/Mumbai: The government on Friday moved to protect the banking sector’s Rs5-trillion-plus exposure to the power sector and kick-start projects that have been stuck for various reasons including lack of approvals and fuel supplies.

After a meeting between the finance ministry, bankers and power sector officials, the government decided to set up a committee to look into the demands raised by power producers. An estimated 100,000 megawatt (MW) of power generation capacity is stuck due to various reasons.

The committee headed by S.B. Nayar, chairman of India Infrastructure Finance Co. Ltd (IIFCL), has been asked to present its report by 7 November.

“Once the committee submits its report, the government will take up the issue with the finance minister as well as the coal ministry, power ministry and Reserve Bank of India (RBI)," said G.S. Sandhu, secretary, department of financial services in the finance ministry, after the meeting.

Power sector companies have requested banks to urge the RBI to allow a special dispensation for power sector loans and asked the government to address the adverse issues faced by them quickly, said one of the bankers who attended the meeting.

Bankers have assured them that each bank will individually assess the viability of the projects and will see if special dispensation can be sought from RBI, said the banker cited above on condition of anonymity.

Sandhu said the government will take up constraints faced by banks with the RBI. “Banks are facing some constraints with regards to viability, extra funding, replacing equity with debt in some cases. RBI regulations are barring the banks from going forward," he said.

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