Decision on capital infusion in PSBs by April-end

The capital assistance to public sector banks is expected to increase the government holding in some of them, based on the fund-raising method

The Indian government on Wednesday said that it will take a decision to infuse around Rs16,500 crore capital in state-run or public sector banks (PSBs) by the end of next month, reports PTI.

The government is expected to take a view on public sector banks' recapitalisation by April-end, financial services secretary R Gopalan said on the sidelines of an event organised by FICCI.

"We are looking at the credit flow (of various public sector banks) at the end of March. After that, we will look at Capital to Risk (Weighted) Assets Ratio (CRAR) and then Tier I (capital)," he said.

Last month, the government announced that it would give financial assistance of Rs16,500 crore to the 16 state-owned banks for shoring up their capital base.

While presenting the Budget, finance minister Pranab Mukherjee had said, "An additional sum of Rs1,200 crore is being infused now. For the year 2010-11, it is proposed to provide a sum of Rs16,500 crore to ensure that the public sector banks are able to attain a minimum 8% Tier I capital by 31 March 2011."

The government infused Rs1,900 crore in 2008-09 as Tier I capital in four public sector banks to maintain a comfortable level of capital to risk weighted asset ratio, Mr Mukherjee had said.
Besides, the finance minister proposed to provide financial support to regional rural banks to enhance their lending capacity.

"The regional rural banks which were last capitalised in 2006-07 are proposed to be further strengthened by providing additional capital so that they have adequate capital base to support increased lending to the rural economy," he had said.

The capital assistance to public sector banks is expected to increase the government holding in some of them, based on the fund raising method.

Last year, the executive board of the World Bank approved a $2-billion loan to enhance public sector banks' capital.


Government creates fund to boost energy efficiency in states

The State Energy Conservation Fund will be built with contributions of at least Rs2 crore each from the various states. The Fund plans to promote and implement energy efficiency and conservation programmes

The Indian government has set up a green fund with an initial contribution of Rs2 crore to promote and implement energy efficiency and conservation programmes in the states, according to a power ministry official, reports PTI.

"It is important to work with the states in the direction of energy conservation. In order to implement energy conservation measures in a more effective way and with the involvement of different states, the State Energy Conservation Fund has been created with an initial amount of Rs2 crore," said Ajay Mathur, director of the Bureau of Energy Efficiency (BEE), an arm of the power ministry.

The Fund will be built with contributions from the states that will chip in at least Rs2 crore each towards the initiative, Mr Mathur added.

Although the plan has been put to action, the Fund would be fully operational only by fiscal 2011-12, he said.

However, several states have already sent requests for grants from the Fund. "So far, we have received proposals from Kerala, Haryana, Rajasthan and Chhattisgarh, which we are evaluating. Other states have also evinced interest in this direction," Mr Mathur said.

Further, the states have also indicated the creation of a State Defined Agency (SDF) for energy conservation on the lines of the BEE. The SDF is supposed to help Special Economic Zones and small-scale units become more energy efficient.

To meet the rising power demand, the government has targeted generating 1 lakh MW in the XII Plan Period (2012-17). The government also believes that energy conservation will be able to save about 25,000MW.



Coal regulatory authority: When will it see the light of day?

For almost three years, there has been a lot of talk on the setting up of a coal regulatory authority. So why is the government still dragging its feet?
India has the fourth-largest coal reserves in the world. It also plans huge power expansions in the coming years, which need to be fuelled by coal. However, the country still does not have a coal regulator. The Indian government has mooted the idea of setting up a coal regulator twice in previous Budgets. It was proposed for the first time in 2008, but the idea died a silent death for reasons unknown. The 2010-11 Budget also mentions the need to set up a coal regulator. Will this become a reality?

Experts believe that this time, a coal regulatory authority may become a reality with the increasing pressure from both the steel and power ministries for setting up such an entity. Both the steel and power sectors in India have been growing rapidly and huge expansions have been planned in the coming years. Coal is a vital raw material for both the steel and power sectors. Private power companies are facing domestic coal acquisition issues, and are falling back on coal imports.

“This time the Bill should be passed because it has been given a thrust by the power and steel ministries. If not now, the Bill should be passed in the winter session (of Parliament),” said Shashikant Hegde, director and chief executive officer, Economic Research India Ltd.

In his Budget speech for FY09, erstwhile finance minister P Chidambaram proposed the setting up of a coal regulator. Similarly, Pranab Mukherjee, the current finance minister, spelt out the same plan for setting up of a coal regulator in his Budget speech for FY11. “A ‘Coal Regulatory Authority’ to create a level playing field in the coal sector is proposed to be set up,” is what the current Budget says.

In August 2008, a media report stated that a Bill for setting up of a coal regulator would be presented for Cabinet approval in the winter session of Parliament. But that did not happen.

The idea of setting up the regulator resurfaced in June 2009, with the coal ministry planning to set up the authority within 100 days. "We’ve already begun the process and this will be institutionalised within the next three months," Union coal minister Sriprakash Jaiswal was quoted as saying in a media report. But there was no update on the proposal after that.

Just a couple of days before the Budget, Mr Jaiswal told the media, “The regulator will be in place by 15th March.” Nothing has happened so far.

A lot has been lost due to the delay in setting up of the coal regulatory authority. “The setting up of the authority two years back would have helped. The coal needs of at least half a dozen coal-based power projects could have been addressed,” said Mr Hegde.

Meanwhile, coal blocks allotted to private players dating back from 2008 still await final clearances and various other issues which have resulted in a delay of critical mining activities.



Shadi Katyal

7 years ago

Are there not enough interference of the Government WHY DO WE NEED ANOTHER SUCH REGULATOR????
Granted due to PSU monopoly and Bihar Coal mines Mafia India has failed to even account for the production and sales of coal, how will a regulator being any solace or accountability???

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