Finance Ministry forms bankers' panel to make power projects going

MUMBAI: The Ministry of Finance has formed a bankers' panel to look into the issues related to stalled power projects and to find ways to come out of the impasse.

The panel will be headed by India Infrastructure Finance Company Ltd chairman SB Nayar and submit its suggestions to the department financial services by November 7, according to a top bank official.

The ministry held a meeting with leading banks and power companies on Friday. The Association of Power Producers has placed demands for removing the bottlenecks such as the issues of coal linkages and cost overruns due to all these delays.

Financial services secretary Gurdial Singh Sandhu chaired the meeting.

"The power association made a presentation but we need to find out which are feasible and which are not," a bank chairman present at the meeting said.

Banks take a hit if projects financed by them fail to generate cash flow after the announced date of completion and face rising bad loans.

As various projects were stuck due to delays in land acquisition and environmental clearance, the Reserve Bank of India had given a two-year grace period during which banks do not take any loss on these loans. For some projects, the grace period will end in the next six months to a year.