According to RBI data, banks are cutting back on lending to the power sector. Credit growth to the power sector dipped to 13.65 per cent in May 2011 till May 2012 from 42.43 per cent in the corresponding previous period.
 
 The reason is that there are few bankable projects, say bankers. Deteriorating finances of State electricity boards, fuel uncertainties and the current procurement system are the main reasons due to which banks and financial institutions are wary of further exposure to the power sector. There are fewer bankable projects, say power industry watchers.
 
 Gross bank credit to the power sector had increased 42.4 per cent between May 21, 2010 (Rs 2,01,980 crore) and May 20, 2011 (Rs 2,87,550 crore). But, in the following year, between May 20, 2011 and May 18, 2012 (Rs 3,26,810 crore) the ailing sector saw domestic loans increasing by just 13.7 per cent.
 
 There is silver lining only for projects for which fuel and other inputs are tied and offtake arrangements made. These projects continue to attract financing. But the environment is gloomy for most power producers.
 
 Banks and institutions will be cautious for at least next couple of years to take further exposure to this sector, unless there is clear sight of a solution to the fuel issues and the State electricity boards’ finances become reasonably healthy, said Debasish Mishra, Senior Director (Consulting), Deloitte in India.