Public sector banks express concerns over power NPAs

Public sector banks express concerns over power NPAsPublic sector banks, including the State Bank of India (SBI) and Punjab National Bank, have urged the Union Finance Ministry to help them prevent loans of nearly Rs 2.3 lakh crore to private sector power companies from turning bad.

The banks have urged Finance Minister P Chidambaram to covey their concerns over to power, coal, petroleum and environment ministers.

According to a Credit Suisse report, private companies' 36 thermal power projects involving a debt of more than Rs 2 lakh crore are now facing potential strain.

The list of projects facing potential stress includes Adani, Lanco and Reliance Power that are under debts of Rs 24,100 crore, Rs 20,100 crore and Rs 32,600 crore, respectively. Tata Power, IndiaBulls and Essar are under debts of Rs 14,400 crore, Rs 21,200 crore, and Rs 21,900 crore, while JSW Energy has a debt of Rs 6,700 crore.

Speaking on the issue, Punjab National Bank CMD KR Kamath said, "This is not an SOS call (to the finance ministry) but a concern is definitely there."

Kamath added that power companies were finding it difficult to repay loans because they were troubled by lack of fuel shortage, and several were not able to produce power, sell it and pocket returns on their investments.

Public sector banks increased lending to private sector power companies in the past few years, in response to the government's policy focus on getting rid of electricity deficit to boost production and economic growth.