Banks press pause button on power loans

The power sector could run into a funding crunch as banks are going slow on lending.Many lenders have hit the sectoral credit exposure limit and concerns have emerged over environmental and coal mining clearances.As a precautionary measure, banks are laying down conditions such as tying up coal linkages.Some are even insisting that the coal supply should be only from within India and not from countries such as Indonesia and Australia, from where a lot of companies are now trying to source coal. But, domestic coal production is beset with its own set of problems like obtaining clearances from the Ministry of Environment,which can take ages or may not come at all. A senior official from a public sector bank said that currently, disbursements are only for power distribution and transmission projects.(BL 20092010)