SBI hails SEBs package, says has no troubled assets to discoms

Mumbai: State Bank of India, which on Friday beat market estimate with an over 25 percent spike in net profit, welcomed the package offered by the government to revive the near bankrupt state electricity boards, saying the move will go a long way in bringing financial discipline to the sector.

"We believe the package will bring about a lasting solution to the problems in the SEBs because at the end of the day discoms' debt will get added to the state debt, which is important.

"We are looking at more permanent solutions to the issues in the power sector," Arundhati Bhattacharya, chairperson of SBI which has the lowest exposure to state discoms, told reporters here while announcing the September quarter earnings.

The nation's largest lender has the lowest exposure among large banks to the troubled SEBs with its overall outstanding debt to them being only around Rs 16,000 crore, out of which only around Rs 7,000 crore are to the eight of the deeply distressed SEBs, she said.

Against this, the banking sector as a whole has a huge exposure to state discoms to the tune of Rs 4.3 trillion in principal alone and the cumulative exposure with interest and unpaid dues are over Rs 5 trillion.

Announcing the revival plan yesterday, Union Power Minister Piyush Goyal said that state discoms in Rajasthan, Uttar Pradesh, Tamil Nadu and Haryana are the biggest loss-making ones, while seven more other state utilities are stressed.

The weakest link in the power supply value chain is distribution, wherein discoms have accumulated losses of about Rs 3.8 trillion, he said.

"Our exposure to discoms is to the tune of Rs 16,000 crore and out of which Rs 7,000 crore are to the eight distressed discoms and the balance is to very well rated discoms. Out of this Rs 7,000 crore, one is stressed but that discom is not default till date.