New Delhi: The Ministry of Power has asked Bank State of India (SBI) to tighten loan norms for distribution companies (discounts) because their loans sustainable in the midst of cancellation courses against creditors and year after year losses pose a threat to stability.
In recent communication to the Chairperson of SBI Dinesh Kumar Khara, Secretary of Alok Kumar, asking the largest public sector lenders in the country to implement additional prudential guidelines that make loans depending on the fiscal discipline of the state government in connection with timely subsidy payments or other contributions to cancel.
This guide aims to make the state government stated responsible for other subsidies or free, they announce, instill fiscal discipline and stop loans by turning off the wet of finance if they do not ignore the norm.
PFC and REK, sectoral lenders under the electricity ministry have implemented the norm.
The letter to the SBI is also seen as a signal to another bank, which usually takes instructions from the largest lender in the country.
Communication highlights the demon cycle in the country’s distribution sector.
A large number of discounts faced solvency and liquidity crisis.
Because their income gap widespread, discounts continue to borrow to meet working capital needs and deeper into the debt trap that never ends.
Kumar blamed the lack of payment of subsidies and electricity bills that were not paid from the government and civilian government departments for the sad financial situation of the diskomy.
He said subsidies were 16.5% of discover income at the national level and ranged from 30% and 40% for several countries.
The latest data available from electrical sector loans managed by PEGS PFC countries that have not been paid the number of state subsidies at Rs 71,865 Crore and unpaid electricity bills from the government department at Rs 52,059 Crore until June.
The magnitude of the problem becomes clear if someone considers overall tortured debt which reaches Rs 5,14,237 Crore in 2019-20 against the turnover of Rs 7.28,975 Crore.
Not surprisingly, they owe RS 98,682 Crore to the central and private sector generation company until December.
This makes it clear that the steps apply by the government, including the 3-Lakh-Crore RS package, to attract discounts from Moras Finance do not have the desired results, which explains the need for all lenders to tighten loan norms.
for discounts.
Widely, these steps require a financial support contingent and directly proportionally by fulfilling clearly defined reform milestones with discoms.
Based on the trajectory of improvement, discounts have also been allowed to borrow additionally with a 0.5% ceiling of SGDP (country gross domestic product).