RBI, banks in talks for recast of power sector loans, says SBI

NEW DELHI: Country's largest lender State Bank of India has said that banks are in talks with the Reserve Bank of India on possible restructuring of loans to the power sector projects that are facing problems in implementation.

"We are working with the RBI on how this can be done without the banks being required to make any provisioning," said SBI's Chairman Pratip Chaudhuri.

He, however, clarified that the State Bank of India, which has over Rs 32,000 crore exposure in the power sector, has not yet received any "special request" from the power sector for restructuring of loans. "They are saying that they would be in position to service their debts," said Chaudhuri after having pre-Budget consultation with Finance Minister Pranab Mukherjee. "We are giving loans to all big companies...It's not right for us to equate all the companies," he added.

Chaudhuri said that the risk in power sector is micro not macro and in some cases they (power companies) have said that the implementation of projects have got delayed due to reasons beyond their control.

A recent study by rating agency CRISIL has pointed out that banks' overall exposure of around Rs 56,000-crore to the power sector could be under stress because of losses of distribution companies, who have seen their losses getting doubled to Rs 40,000 crore in 2010-11 from 2008-09.

The finance ministry had asked state-run banks to give company-wise exposure to loans in four stress sectors-aviation, telecom, commercial, real estate and power utilities- which have raised worries that it could spike the bad loans and could derail their lending plans.

The gross non-performing assets, or NPAs, of commercial banks have risen over 25,000 crore in the first six months of the current fiscal. State-run banks wrote off nearly Rs 17,300 crore in 2010-11 against Rs 11,000 in the year before.

As per the latest figures, as on November 30, state-run banks have request for restructuring of 344 loan accounts with an outstanding of Rs 1.65 lakh crore.

Public sector banks had exposure worth over Rs 2.97 lakh crore to the power sector at the end of second quarter of the current fiscal, with maximum credit doled out by SBI.

Source: EconomicTimes