Cabinet relaxes working capital norm for discoms to get loan under ₹90,000 crore liquidity plan

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Finance Minister Nirmala Sitharaman had in Could introduced the ₹90,000 crore liquidity infusion into cash-strapped discoms, dealing with demand hunch because of the lockdown to include COVID-19

New Delhi The Union Cupboard on Wednesday authorized a proposal to calm down working capital restrict norm for discoms beneath the Ujwal DISCOM Assurance Yojana (UDAY) to get loans as a part of ₹90,000 crore liquidity infusion scheme.

After the Cupboard assembly, Union Minister Prakash Javadekar in a press convention mentioned, “Energy sector has an issue. There’s a hunch in energy consumption. The payments aren’t being collected by them. PFC and REC have been allowed to present loans above the restrict extra the 25 per cent working capital restrict. This can improve liquidity of the state discoms“.

“The working capital restrict is 25% of final yr’s income. Now the restrict is relaxed,” he additional mentioned.

Finance Minister Nirmala Sitharaman had in Could introduced the ₹90,000 crore liquidity infusion into cash-strapped discoms, dealing with demand hunch because of the lockdown to include COVID-19.

Nevertheless, a number of the discoms weren’t eligible for getting loans beneath the bundle as a result of they weren’t assembly working capital restrict norms beneath the UDAY scheme.

Below the UDAY, the banks and monetary establishments are restricted to lend working capital as much as 25% of a discom’s income within the earlier yr.

The restriction was a part of the UDAY scheme, which had been authorized in November 2015 by the Union Cupboard for revival of debt-laden utilities.

In addition to, the discoms can get mortgage beneath the bundle in opposition to the receivables from State governments to clear their dues. However a number of the discoms didn’t have headroom beneath each the provisions.

Thus the ability ministry had proposed to calm down working capital restrict norm in order that these discoms can avail loans beneath the bundle to clear their dues.

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