Giving a big relief to the cash strapped power distributors the government has approved a plan to bail out ailing state electricity distribution (SEB) companies, through a restructuring of their short-term loans. The government has approved Rs 1.9-lakh crore debt restructuring for power distribution companies, second such big move in less than a decade.
In a meeting of the cabinet committee on economic affairs (CCEA) it was decided that states will take over half of the liabilities of the electricity distribution companies, which will issue bonds to banks based on government guarantee. The takeover process will be spread over two to five years, while the remaining 50% of the liabilities would be rescheduled by lenders by providing a longer tenure and also a moratorium on payment of installments. However, the planned restructuring needs to be accompanied by steps such as tariff revision, metering and payment of subsidies by the state governments.
State electricity boards (SEBs) have long been ailing because of the humongous debt they have had to raise at different points of time and many of them have not revised power tariffs for years and were selling power below cost just as the government wanted to feed their populist agenda. That forced the distribution companies to borrow to fund their losses.
The situation was also worrisome for the lenders who were not getting timely repayments, many banks have seen their exposure to these SEBs rise to 5-13% of their respective books, main lenders include Canara Bank (13%), Allahabad Bank (13%) OBC (11%), Corporation Bank (11%), PNB (9%), Union Bank (7%), BoB (6%).
MoneyWorks4Me is a SEBI-registered Investment Adviser (IA) dedicated to helping investors build long-term wealth through transparent, research-driven, conflict-free guidance. Founded in 2008, we started our journey as a Research Analyst (RA), providing deep fundamental analysis, intrinsic value insights, and long-term investing frameworks for Indian equities. In 2017, we transitioned to a full-fledged SEBI-registered Investment Adviser, strengthening our commitment to acting as a fiduciary—always putting the investor’s interest first.
To become India’s most trusted, research-powered fiduciary advisory platform—where every investor, regardless of experience, can make calm, confident, and well-reasoned investment decisions.
MoneyWorks4Me ensures this through: