ICICI Bank, together with BSE and PTC India, has sought a licence from power market regulator Central Electricity Regulatory Commission to set up a new power exchange, the bank said in a regulatory filing on Monday. “This proposed institutional exchange, subject to necessary regulatory approvals, would leverage on the experience and expertise of its stakeholders in their fields; knowledge of the power sector, funding of power projects and associated infrastructure, setting-up and running various exchanges and platforms in India, and offer the market participants a credible power trading platform,” ICICI Bank said in the filing.
The power sector has of late emerged as the source of much of the stress in the banking sector. A number of projects have failed to repay their loans to banks and other financial institutions because of a lack of power purchase agreements (PPAs) or other regulatory hurdles. ICICI Bank’s exposure to the power sector at the end of the June quarter stood at Rs 46,625 crore, of which 30% was classified as stressed.
As per the Reserve Bank of India’s (RBI) February 12 circular, lenders will have to file for insolvency proceedings against stressed power assets worth about Rs 1.8 lakh crore by Tuesday after the Allahabad High Court refused to provide any interim relief to power companies from the circular, which mandates early detection of bad loans. Analysts’ estimate resolution under this process could result in hefty haircuts of up to 70% for banks.