Coal India standardizes interest rates on delayed payments to boost demand

  • The revised rate, based on the Reserve Bank of India’s repo rate plus 3%, replaces previously varied interest rates, which ranged from 9.5% to 14.85%. The move follows consumer requests and is part of Coal India's efforts to ease policies for its customers as private sector competition grows.

Rituraj Baruah
Published30 Sep 2024, 02:41 PM IST
Coal India, which supplies the fossil fuel under long-term FSAs, has an annual contracted quantity of 705.7 million tonnes for FY25. (File Photo: AP)
Coal India, which supplies the fossil fuel under long-term FSAs, has an annual contracted quantity of 705.7 million tonnes for FY25. (File Photo: AP)

State-run Coal India Ltd (CIL) is set to implement uniform interest rates on delayed payments under its fuel supply agreements (FSA) starting Tuesday, a move aimed at boosting coal demand amid rising competition from private players.

Effective 1 October, CIL will apply a standard interest rate on overdue payments, adjustments, and recoverable sums that remain unpaid after the due date. Previously, interest rates varied widely, even for the same generating companies with different fuel supply agreements. 

Read this | Coal India and ONGC: A contrasting outcome of two PSUs in Q1FY25

The policy change aims to streamline rates across various FSAs and schemes, the company said in a statement.

The shift comes at a time when private sector players are expanding following the opening of commercial coal mines in 2020. The board of Coal India had approved the rate parity in July, amending the interest rate definition within FSAs. The new uniform rate will be linked to the Reserve Bank of India’s (RBI) repo rate, reflecting a significant reduction in customer financial burden.

"CIL’s revised interest rate will be the RBI repo rate on the due date of payment plus 3%, which is notably lower than previous rates," the company stated. Earlier, rates ranged from 9.5% to 14.85% across various agreements. The new interest structure will apply to payments delayed beyond 30 September 2024, while prior outstanding amounts will still follow the old terms.

This move follows requests from coal consumers who had raised concerns over the uneven interest rates. The use of different bank lending rates was also flagged as a potential area of dispute, prompting the adoption of a uniform rate linked to the RBI’s benchmark repo rate, which is periodically reviewed.

Coal India, which supplies the fossil fuel under long-term FSAs, has an annual contracted quantity of 705.7 million tonnes for FY25.

The introduction of this policy is part of a broader effort by the public sector giant to support its customer base. In August, CIL agreed to supply more coal to power plants than their annual contracted quantities. In July, it relaxed rules for e-auctions and urged its subsidiaries to boost auction sales over the next two quarters.

At 0215pm, Coal India shares traded at 509 apiece on the BSE, down 1.4% from previous close.

Catch all the Business News , Corporate news , Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.

MoreLess
First Published:30 Sep 2024, 02:41 PM IST
Business NewsCompaniesNewsCoal India standardizes interest rates on delayed payments to boost demand

Get Instant Loan up to ₹10 Lakh!

  • Employment Type

    Most Active Stocks

    Tata Steel share price

    166.15
    10:00 AM | 7 OCT 2024
    -0.6 (-0.36%)

    Bharti Airtel share price

    1,656.15
    10:00 AM | 7 OCT 2024
    15.4 (0.94%)

    Bharat Electronics share price

    272.75
    10:00 AM | 7 OCT 2024
    -4.45 (-1.61%)

    Tata Power share price

    455.15
    10:00 AM | 7 OCT 2024
    -11.55 (-2.47%)
    More Active Stocks

    Market Snapshot

    • Top Gainers
    • Top Losers
    • 52 Week High

    Coforge share price

    7,220.20
    09:49 AM | 7 OCT 2024
    97.05 (1.36%)

    Dr. Lal Pathlabs share price

    3,453.55
    09:49 AM | 7 OCT 2024
    -40.7 (-1.16%)
    More from 52 Week High

    Vodafone Idea share price

    9.14
    09:49 AM | 7 OCT 2024
    -0.66 (-6.73%)

    Bombay Burmah Trading Corporation share price

    2,590.60
    09:48 AM | 7 OCT 2024
    -174.65 (-6.32%)

    Jubilant Ingrevia share price

    752.95
    09:49 AM | 7 OCT 2024
    -41.3 (-5.2%)

    Rail Vikas Nigam share price

    468.80
    09:49 AM | 7 OCT 2024
    -24.3 (-4.93%)
    More from Top Losers

    Astrazeneca Pharma India share price

    8,008.55
    09:49 AM | 7 OCT 2024
    576.05 (7.75%)

    Home First Finance Company India share price

    1,292.55
    09:49 AM | 7 OCT 2024
    47.2 (3.79%)

    NBCC India share price

    116.90
    09:49 AM | 7 OCT 2024
    4.2 (3.73%)

    Nuvama Wealth Management share price

    6,111.05
    09:49 AM | 7 OCT 2024
    211.8 (3.59%)
    More from Top Gainers

    Recommended For You

      More Recommendations

      Gold Prices

      • 24K
      • 22K
      Bangalore
      77,685.000.00
      Chennai
      77,691.000.00
      Delhi
      77,843.000.00
      Kolkata
      77,695.000.00

      Fuel Price

      • Petrol
      • Diesel
      Bangalore
      102.86/L0.00
      Chennai
      100.75/L0.00
      Kolkata
      104.95/L0.00
      New Delhi
      94.72/L0.00

      Popular in Companies

        HomeMarketsloanPremiumMint Shorts