Monday, March 15, 2010

RBI TO SHED 80% RISK WEIGHT ON GOVT-BACKED POWER LOANS

The Reserve Bank of India has decided to reduce the risk weight on loans to power sector projects
guaranteed by state governments, unlocking Rs. 30,000 crore for the sector that is struggling to meet
the capacity targets for the Eleventh Plan Period. Lending to power projects currently attracts a risk
weight of 100%, which is proposed to be lowered to 20%, when such loans are guaranteed by states. The change will allow state-run power sector finance companies, such as PFC and REC, to expand their loan book at the existing levels of statutory capital, helping them lend more to power sector projects.

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