Cancelling 62 coal blocks to push bank NPAs up by Rs 1 lakh cr
Written by Priyadarshi Siddhanta | New Delhi | January 14, 2014 03:52
Summary
The figure was flagged at Monday’s cabinet meeting while deciding on the fate of 62 coal blocks.
The CCEA was undecided on the next course of action due to the huge financial implications - The finance ministry has told the Union cabinet that the current round of cancelling coal block allotments will cause non-performing loans of banks to jump by about Rs 1,00,000 crore.
The figure was flagged at Monday’s cabinet meeting while deciding on the fate of 62 coal blocks about which the Supreme Court has asked for a status report. The CCEA was undecided on the next course of action due to the huge financial implications.
It authorised Finance Minister P Chidambaram and Law Minister Kapil Sibal to advise Attorney General Goolam E Vahanvati to seek more time from the court so that it can examine the coal ministry’s inputs before it firms up its views.
The 62 blocks were allotted between 2005 and 2008. The CBI is conducting a court-monitored probe into alleged irregularities in the allotment of 32 of them. The coal ministry has identified another 30 for an internal inquiry.
The threat of a spike in NPAs of banks comes at a time when banks are weighed down by bad loans of Rs 2,29,007 crore as on September 30, 2013, compared to Rs 1,79,891 crore on March 31, 2013 for the 40 banks that are listed on stock exchanges.
Cancelling coal block allotments would certainly mean forfeiture of bank guarantees and reneging on repayment commitments by borrowers. The impact would also be disproportionately higher on public sector banks.
Vahanvati had last week accepted in the court that something had gone wrong with the allotments and that they could have been done in a better way.
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Govt to list coal blocks that can be nixed in SC
NEW DELHI: The Centre will inform theSupreme Court this week as to which of the 61coal blocks allocated to private companies since 1993 should be scrapped on grounds such as deficiencies in procedures or failure to utilize the blocks.
The Cabinet on Monday took a significant step to end the uncertainty over 61 coal blocks where no criminality has been uncovered in allocation but which are under the scanner due to faults in the screening committee process by which the fields were allotted.
Sources said around 30 coal blocks might be de-allocated, many on the grounds that no coal had been extracted for several years due to reasons ranging from financial woes to failure to procure mining licenses.
During a hearing on the coal allocation scam last week, attorney general G E Vahanvati told SC that he would consult the Centre whether 26 coal blocks allotted since 2006 - where no licenses have been granted - can be cancelled.
The AG's suggestion has been considered favourably and criteria is being drawn up by the law, coal and environment and forest ministries to decide the basis on which coal allocations can be scrapped.
Sources said the initiative to scrap coal allocations where nothing has been mined for years could be the government's best bet to cap the scam and persuade the SC not to opt for largescale cancellation.
Some 195 coal blocks allotted to private as well as government firms since 1993 are being examined by the Central Bureau of Investigation.
It is felt processes adopted by the screening committee were so poor and paper work so shoddy that defending the allocations is an uphill task. Vahanvati admitted in court that though decisions were taken in good faith, something had gone wrong in the allocations.
CBI has filed 16 FIRs dealing with cases were it has found criminality such as collusion or willful suppression or misrepresentation of facts in the applications for coal blocks.
The Centre hopes the 61 coal blocks where CBI has so far not found any criminal intent could be quickly sorted out on the basis of its assessment about the capacity of the allottees to utilize the blocks. The views of state governments will also be sought.
The Cabinet on Monday took a significant step to end the uncertainty over 61 coal blocks where no criminality has been uncovered in allocation but which are under the scanner due to faults in the screening committee process by which the fields were allotted.
Sources said around 30 coal blocks might be de-allocated, many on the grounds that no coal had been extracted for several years due to reasons ranging from financial woes to failure to procure mining licenses.
During a hearing on the coal allocation scam last week, attorney general G E Vahanvati told SC that he would consult the Centre whether 26 coal blocks allotted since 2006 - where no licenses have been granted - can be cancelled.
The AG's suggestion has been considered favourably and criteria is being drawn up by the law, coal and environment and forest ministries to decide the basis on which coal allocations can be scrapped.
Sources said the initiative to scrap coal allocations where nothing has been mined for years could be the government's best bet to cap the scam and persuade the SC not to opt for largescale cancellation.
Some 195 coal blocks allotted to private as well as government firms since 1993 are being examined by the Central Bureau of Investigation.
It is felt processes adopted by the screening committee were so poor and paper work so shoddy that defending the allocations is an uphill task. Vahanvati admitted in court that though decisions were taken in good faith, something had gone wrong in the allocations.
CBI has filed 16 FIRs dealing with cases were it has found criminality such as collusion or willful suppression or misrepresentation of facts in the applications for coal blocks.
The Centre hopes the 61 coal blocks where CBI has so far not found any criminal intent could be quickly sorted out on the basis of its assessment about the capacity of the allottees to utilize the blocks. The views of state governments will also be sought.
http://timesofindia.indiatimes.com/india/Govt-to-list-coal-blocks-that-can-be-nixed-in-SC/articleshow/28762259.cms