Bank CEOs review fallout of coal blocks cancellation

Chief executives of banks on Friday discussed the ramifications of the Supreme Court's order cancelling allocation of coal blocks.

“The management committee of the Indian Banks Association did discuss implications of the apex court order in the coal blocks case. But, it is too early to speak in precise terms. We are assessing the impact,” the chief executive of a large public sector bank said.

Banks might seek "regulatory forbearance" if the ruling impacts asset performance. This would include flexibility for restructuring or reworking payment terms and schedule in case of companies which might be impacted by the verdict.

Lenders are concerned as to whether the verdict would result in the non-availability of coal for performing assets.

In case there is an impact on asset quality due to the de-allocation of 214 coal blocks, it would be "desirable" to have some forbearance, said the bankers.

“If banks get regulatory forbearance, it would be good. But right now, we do not know if we need it. None of the affected companies have come forward asking for help from the lenders till now,” a senior banker said after the meeting.

The government should come up with a clear and transparent arrangement for coal block allocation. The court has given six months time to finalise policies for that, said the chief executive of the large public sector bank.