While the Centre has called a meeting with state-run banks’ chiefs on Friday to discuss state power distribution companies’ (discoms) loan restructuring issues, the lenders expect that all the contours of the recast will come up in the meet as power minister Piyush Goyal will chair it.
The Narendra Modi government is discussing ways to recast R4.3 lakh-crore loans of nine state discoms in order to bring down their liabilities. But banks said till now they have not got any “formal proposal” from the government on that. “All the chairmen and managing directors of the banks, which have exposure to the discoms, have been called to join a meeting in Delhi on Friday. The meeting will be chaired by the Union power minister. Senior finance ministry officials will also be present,” a CMD of a state-run banks told FE on condition of anonymity.
“I will attend tomorrow’s meeting. I think all the contours of the recast of discom loans will come up in tomorrow’s meeting,” he said. Under the new Financial Restructuring Plan (FRP) for discoms, nine state governments will have to take over the debt of their power distribution utilities. The states that have the highest loans in their discoms are Rajasthan, Andhra Pradesh, Uttar Pradesh, Tamil Nadu, Haryana, Jharkhand, Bihar and Telangana. The banker cited above said for the lenders, the proposed loan recast will release the entire capital stuck in the ailing discoms as it would help banks upgrade the loans to standard category. “The proposed recast will reduce our total amount of restructured assets and will also ensure that these accounts will not slip into NPAs. And for the discoms, as the loan will be converted into bonds, the rate of interest will come down,” he added.