Cabinet expands lending limits for power discoms to help them clear dues

Discoms can borrow only up to 25% of last year's working capital, under UDAY; This has now been relaxed for a one-time lending and would help discoms that have exhausted borrowing limits

The Cabinet Committee on Economic Affairs (CCEA) on Wednesday relaxed the borrowing limits for the state government-owned power distribution companies (discoms) as a one-time measure. This was done to assist power retailers to clear their dues to generation and transmission companies to help reduce stress in the sector.

Discoms can borrow only up to 25 per cent of their previous year’s working capital under the limits stipulated in the UDAY scheme. Borrowing were tied to discoms’ operational performance to ensure discipline.

The limit has now been relaxed for a one-time lending. This would help those discoms that have exhausted their borrowing limits.

“The