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GOVERNMENT OF INDIA Ministry of Finance DEPARTMENT OF FINANCIAL SERVICES
RAJYASABHA UNSTARRED QUESTION NO.2997 TO BE ANSWERED ON 20TH DECEMBER, 2011/AGRAHAYANA 29, 1933 (SAKA) Power Loans by Banks
2997. SHRI RAJEEV CHANDRASEKHAR:
Will the Minister of FINANCE be pleased to state:
(a) Whether Government is aware of a recent research report by a credit-rating firm that 12 per cent of all power loans by banks are at risk of default;
(b) If so, the details thereof; and
(c) The steps Government has taken or proposes to take in this regard?
ANSWER MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI NAMO NARAIN MEENA)
(a) & (b): As a part of knowledge sharing endeavour Credit Rating Information Services of India Limited (CRISIL), a private rating company has published a research report in October, 2011, titled 'Power Sector Lenders-will the credit quality trip? wherein it has been indicated that lenders exposure at risk is estimated at 4.5 per cent in the base case scenario and 11.6 per cent in stress case.
(c): Reserve Bank of India Master Circular dated July 01, 2011on Exposure Norms issued to all Scheduled Commercial Banks stipulate among other things that the exposure ceiling limits would be 15 per cent of capital funds in case of single borrower, which may exceed by 5 per cent in case of infrastructure projects and exposure of 40 per cent of capital funds in case of group borrowers, which may exceed by 10 per cent in case of infrastructure projects. In addition, in exceptional circumstances, with the approval of their Boards, Banks can consider enhancement of the exposure to a borrower (single as well as group) to a further 5 per cent of capital funds.
Further, as a prudential measure aimed at better risk management and avoidance of concentration of credit risks, the Reserve Bank of India has advised the banks to fix their limits on their exposure to specific industry or sectors as per their Board approved policies.