Lending to Discoms: Power ministry wants RBI to direct banks to follow strict norms

With the loss-making power distribution companies (discoms) being a sticky burden on government finances as they need recurrent bailout packages, the Union government is leaving no stone unturned when it comes to ensuring the latest package to salvage these entities doesn’t falter on their financial indiscipline and operational laxity.

The Union power ministry is planning to ask the Reserve Bank of India (RBI) to direct public sector banks (PSBs) follow strict prudential norms when it comes to lending to discoms, power secretary Alok Kumar said on Friday. Prudential norms for PFC-REC —the principal sources of loans for the discoms — have already been tightened, and the public sector banks will be made to follow similar standards.