NEW DELHI, NOV 28:
An Indian Supreme Court order scrapping most coal extraction permits given to companies would have a likely impact of Rs. 96,484 crore ($15.6 billion) on state-run lenders, the junior finance minister told parliament on Friday.
The government had deduced the impact of the cancellation of the so-called coal block allotments on banks due to likely stoppage of power production, Jayant Sinha said in a written reply to a lawmaker question on bad loans for state banks due to the verdict.
It was, however, not clear whether he was referring to an increase in bad loans or loan exposure of banks to affected companies.
Bankers and analysts have previously said it was difficult to quantify the increase in bad loans as the scrapped coal blocks will be returned after March and as all the loans to the affected companies may not turn sour.
Sinha said bad loans of state lenders were a provisional 5.32 per cent of total loans as of end-September, while that of private sector lenders was a provisional 2.04 per cent.
Bad loans of state banks in coal industry were 0.23 per cent as of end-September, while for private banks it was 0.22 per cent.
Source:Business line
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