Power sector can take NPAs to alarming levels: SBI chairperson Arundhati Bhattacharya

State Bank of India, the country’s largest lender, has red-flagged the power sector as a fast-ticking time bomb that could escalate the banking system’s non-performing assets (NPAs) to an alarming level over the next couple of months and erode confidence in banks.

With the sector accounting for the highest chunk of gross bank credit among industries, State Bank of IndiaBSE -1.22 % chairperson Arundhati Bhattacharya conveyed banks’ anxiety to the government in separate interactions  with top officials from the ministries of finance and power over the last week.

The sector’s woes were also discussed at meetings held by the Prime Minister’s office on stalled investments in the past week.

State electricity boards and discoms had accumulated losses of over Rs 3 lakh crore by March 2014 and owe over Rs 2 lakh crore to banks. The Reserve Bank of India said in late June that Rs 53,000 crore of loans to seven state electricity boards are highly likely to turn into NPAs.

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