Coal block cancellation leaves banks worried

New Delhi: The cancellation of coal blocks by the Supreme Court has sent banks in a jittery mode as they have extended over Rs1 lakh crore loans to power plants that were fed by these mines.Almost all banks including SBI and ICICI Bank have lent to power plants that were put up based on coal from 214 coal blocks alloted since 1993. 

 

While none of the bankers were willing to go on record on the impact of the Supreme Court ruling, sources said the lenders were assessing their exposure to the cancelled mines. 

“We are glad that this is over with the SC verdict on coal blocks allocation. We now look forward for a quick plan of action for ensuring that coal supplies are not disrupted and thereafter a swift and transparent bidding process for reallocation,” SBI chairperson Arundhati Bhattacharya said. 

 

According to estimates, another public sector lender IDBI Bank has an exposure of Rs2,000 crore. Commenting on SC judgement, Yes Bank managing director Rana Kapoor said the exposure of his bank is minimal. “As the the court has said that coal supply would be maintained to the power plants, therefore there would not be too much of an adverse impact on banks,” he said. Risks of banks are well diversified and fairly well spread, he  added.