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Will illegal coal blocks impact the banking sector?
Aug 26, 2014

Stock prices of power and metal companies with captive coal mines reacted negatively in the past few days. However, implications of this decision are much wider. And one of the key casualties would be the public sector banks. As per RBI, the lenders' overall exposure to the power and steel sector stands at around Rs 7.7 trillion. These sectors, facing tough times due to poor fuel and raw material supply, are already a major cause of stressed assets on the lending books of the banks.

Data Source: Business Standard

As the final verdict on the matter is yet to be given, one can only guess the likely impact on some of the key sectors of the Indian economy. Nevertheless, this development only further highlights the need for banks, especially PSUs, to adopt a more rational lending approach.

This Chart Of The Day was published in The 5 Minute WrapUp - Can the 'coalgate' verdict benefit India?

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