The Federation of Indian Chambers of Commerce and Industry (FICCI) has suggested a lower payout to upgrade a stressed account in a recommendation to the Reserve Bank of India.
FICCI recommended the upgrade of a default account under loan restructuring upon payment of 10 per cent of outstanding principal and capitalised interest, against the earlier 20 per cent, to enable quicker asset turn-around considering dependence on regulatory decisions and payments by State Discoms.
“As is known, the power sector is besieged by problems arising out of unanticipated events and circumstances not within its control,” a FICCI statement said.
To aid the power sector, FICCI has recommended deepening of short-term markets enabling capacities to participate and meet demand periodically. This will be based on flexible trade with the progressive introduction of derivatives as risk management tools. The purpose is to avoid idling of capacities in the absence of long-term contracts because of demand uncertainties.
The industry body has also recommended configuring a liquid fuel segment, which can align with the power market and facilitate supply of coal and gas to power plants wanting to enter into flexible and shorter duration contracts.
FICCI has also recommended a shift from lending by commercial banks to infrastructure, pension and insurance funds to handle asset-liability mismatch, in the future.