The Reserve Bank has provided some relief to banks holding bonds of debt-ridden State Electricity Boards (SEBs) that were issued to them as part of the cleaning up exercises of these power utilities.
According to sources, banks have been allowed to keep Ujwal Discom Assurance Yojana (UDAY) scheme bonds under the held-to-maturity (HTM) category.
This will ease pressure on bond yields and debt market, sources said.
HTM refers a part of debt holdings of the banks which are not subjected to daily price movement and can be held by banks till maturity.
Earlier in the day Power Minister Piyush Goyal retweeted that the central bank has allowed lenders to hold the bonds under the HTM category.
Under the UDAY scheme, state governments which own the power discoms, can take over 75 per cent of their debt as of September 30 and pay back lenders by selling bonds.
For the remaining 25 per cent, discoms will issue bonds. The rescue plan, called Ujwal Discom Assurance Yojna or UDAY, provides “a permanent resolution of past as well as potential future issues of the sector” and empowers the utilities to break even in next 2-3 years.
Operational efficiency improvements are proposed to be brought in by compulsory smart metering, upgradation of transformers and meters to reduce electricity lost during transmission and distribution (or theft) from around 22 per cent to 15 per cent by 2018-19, as per the scheme.