Power sector lending limit should be relaxed
Federation of Indian Chambers of Commerce and Industry (FICCI) has said in its pre-budget 2013 memorandum that the sectoral lending limit of banks should be relaxed to power sector to facilitate fresh lending. Many public sector banks have reached their lending limits. Power sector should be included in priority sector lending, said FICCI. Another recommendation that FICCI had given is that financing of operational projects by IIFCL should be taken out or such other agencies should be encouraged to create more lending capacity for banks. According to FICCI, under the existing IRDA guidelines, insurance company investments flow mostly to state owned institutions. Allowing insurance company investment to power sector will enhance market liquidity, the industry body explained. FICCI feels that credit rating for investment in debt paper should be reduced. Insurance companies should be encouraged to invest outside public-sector entities, specifically in power sector. FICCI opines that the macroeconomic risks arising out of adverse interest rate and exchange rate movements need to be reduced.