Rs 1.5 lakh crore loans to power may turn NPAs: Banks

Banks are facing the prospect of at least Rs 1.5 lakh crore of their loans to around two dozen power projects turning non-performing on account of a new rule that mandates them to provide for bad debts if the project cost exceeds 10% of the original estimate due to delays.

Bankers said the issue — which has been flagged to RBI as well as top government officials — is much bigger as several smaller projects too are unable to get fresh funding from lenders which fear an impact on their profitability. “RBI had allowed us to fund projects that are delayed but which bank will be willing to set aside Rs 100 for a loan of Rs 100?” said a top banker.

Banks to provide for the full loan amount even if they extend a loan of, say, Rs 20 crore over an above their existing exposure of Rs 100 crore.

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