Central Bank not mulling loan recast to power utilities

Central Bank of India, the sixth-largest public sector bank, has no plans at the moment to restructure any of its loans to power distribution companies as it expects many State Governments to revise the power tariff structure in their respective States.

“As of now, we see no problems with our exposure to the power sector. We will take a call on restructuring some of the loans to this sector when there is a need for it,” Mr R. K. Dubey, Executive Director, told Business Line on the sidelines of the inauguration of an ATM here on Saturday.

The bank’s exposure to different power distribution companies in the country stands at around Rs 10,000 crore, with the bulk of it being in Rajasthan, West Bengal, Tamil Nadu and Uttar Pradesh, he said.

“Most of these State Governments, with the help of the Centre, are working out different business models for the utilities (in order) to make them more viable,” he pointed out.

Some banks have, of late, been worried about their exposure to State electricity boards, with a recent Crisil report also indicating that losses of distribution companies or discoms may bloat up from Rs 27,500 crore in 2009-10 to about Rs 35,000 crore this fiscal.


Mr Dubey said the bank was expecting the Centre to infuse Rs 700 crore by March 31, which would push up its tier 1 capital to above 8 per cent.

“We will require a fresh capital infusion next year. We will determine how much we require after we make our final estimates of credit growth for next fiscal,” he said.

The Finance Ministry had stated that it will be infusing Rs 18,000 crore into 12 PSU banks in the current fiscal. This includes some Rs 7,900 crore for State Bank of India alone.

It is also adding 250 new branches in 2012-13 from the current level of 4,000.

Source: Business Line


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