Stringent financing norms to hit PSU power companies

News: Banks have told the Finance Ministry that most public sector power entities including state distribution companies will be ineligible for bank finance under the additional prudential lending guidelines suggested by the Power Ministry. The issue was raised in an interaction between officials from various departments including the Finance Ministry and bank executives last month

Views: There is a concern that if the additional regulations are implemented, it may also impact the existing exposure and make those accounts stressed. Inability to access bank funds could adversely impact these power utilities already facing high electricity demand

Impact: Negative