The Union Finance Ministry has asked the Coal Ministry to prioritise supplies to power projects that are stuck due to unavailability of coal to ensure that loans to such projects do not become non-performing assets. The move comes at a time when projects worth around Rs 5.39 lakh crore are stuck in the power sector.
The Finance Ministry believes that any delay in coal supply will have a detrimental impact on some of the projects and could lead to further increase in banks' NPA or bad loans. It is going to be a vicious circle as banks will not be in a position to lend to new projects even if they have proper fuel supply agreements, a Finance Ministry official said.
Gross non-performing assets of public sector banks have increased from Rs 71,080 crore in March 2011 to Rs 1.55 lakh crore in December 2012.