Lenders fear coal block cancellations may spike NPA pains

Leading bankers today expressed apprehension over the fallout of the Supreme Court decision to deallocate as many as 214 coal blocks, saying it could increase the already high NPA levels of banks but added that as of now there is no need to panic.
"It could happen... I am not ruling it out, but again we are not pressing all the panic buttons. I don't think there is a case for that. We need to be little patient and watch where it goes," State Bank Chairperson Arundhati Bhattacharya said here after the customary post-policy media briefing.
SBI has over Rs 4,130 crore exposure to some of the affected companies which have coal linkages with the cancelled coal blocks.

Chanda Kochhar, the chief of the largest private sector lender ICICI Bank, which has not disclosed its exposure to the affected blocks, however, observed that it's too premature to be panicked about it and said if the government comes out with a solution it will actually allow the assets to keep operating.
"Right now, one has to feel comforted about the fact that there is a clear intent to not disrupt the process and there is a clear intent to say mines should work and within a period a solution should be found and we hope for that," Kochhar said.

Last Wednesday, the Supreme Court de-allocated as many as 214 coal blocks allocated since 1993, out of which 46 were operational for many years and 40 are about to be commissioned. It had spared only 4 blocks.
The court also imposed a levy of Rs 295 per tonne of coal extracted till now by all cancelled licensees which has to be paid by December 31 2014. The coal extracted between January 1, 2015 and March 31, 2015 will also attract a levy of Rs 295 per tonne.