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Banks to take up coal loans with RBI: Sandhu

Banks will take up the issue of restructuring loans extended to projects affected by the cancellation of coal blocks by the Supreme Court with the Reserve Bank of India (RBI).

“Banks will be talking to RBI so that they are given some kind of flexibility in restructuring those accounts. Efforts will be made to avoid these accounts from becoming non-performing assets (NPAs),” financial services secretary GS Sandhu said here.

Sandhu said banks have lent to power companies and steel plants which in turn have coal linkages with the cancelled coal mines. “Some impact may be there, and what exactly it will be is being assessed,” he told reporters after addressing the annual general meeting of Indo-American Chamber of Commerce.

The finance ministry is also talking to the coal and power ministries to ensure that the fuel supply alternatives are put in place, he said.

Indian Banks Association, which represents bank managements, had discussed the matter at a meeting last week and hinted at seeking a “regulatory forbearance” in case there is impact on the asset quality from the affected accounts.

On Jan Dhan scheme, Sandhu said banks have opened 5.1 crore new accounts under the programme and collected Rs 3,600 crore in deposits. Opening of 5.1 crore accounts means meeting 70 per cent of the target of 7.5 crore set by the government by January 26, 2015, he said.

On Reserve Bank Governor Raghuram Rajan’s concerns on the speed at which the scheme was being rolled out, Sandhu said, “We have discussed with RBI, with the Governor and other functionaries there. There are no differences now.”

Source: The Indian Express