Calcutta, Feb. 12: The State Bank of India (SBI) has found a novel way to ratchet up its credit offtake. The country’s largest public sector bank is now planning to offer loans against the securitised dues of state electricity boards (SEBs).
To begin with, SBI has opened talks with Damodar Valley Corporation to provide Rs 550 crore to the latter against bonds of West Bengal State Electricity Board (WBSEB).
The Bengal power board will issue the bonds to DVC under the securitisation scheme of dues. The board owes Rs 600 crore to DVC.
SBI is probably the first bank in the country to look into this new area of credit offtake.
Sources said that the three state electricity boards – WBSEB, Bihar State Electricity Board and Jharkhand State Electricity Board have not paid Rs 1,200 crore to DVC on account of power purchase.
DVC sources said, “WBSEB is the first board which wants to issue bonds under the securitisation scheme against our dues. Following this we approached SBI to issue loans against these bonds.”
The loan is required for expanding DVC’s Mejia IV (210 mw), V and VI (2x250 mw) units at Durlavpur, Bankura and VIIth and VIIIth units (2x250 mw) of Chandrapura thermal power station.
Sources added that the corporation has told SBI that the bonds are backed by government guarantee and are treated as SLR (statutory liquidity ratio) status bonds.
“We have asked SBI not to deduct any margin money against these bonds and treat it in totality,” DVC sources added.
When contacted SBI officials said, “Issuing loans against securitised bonds is an interesting option of giving advances. We are currently negotiating with DVC in this matter.”
According to the securitisation scheme approved by the Cabinet Committee of Economic Affairs, the state governments will issue 15-year, 8.5 per cent tax-free bonds with interest payable effective from October 1, 2001, to the central power units. There will be a five-year moratorium on redemption with that falling between the 6th and 5th year of the bonds.
The state electricity boards had accumulated dues of Rs 41,473 crore with interest amounting to Rs 15,746 crore up to the end of February 2001.