The biggest loser of the Supreme Court judgment cancelling the allocation of 214 coal blocks is the power sector. Coal constitutes a major part of the cost for power companies. This has worried most banks - their exposure to the power sector is about seven per cent of the credit disbursed, which is roughly around Rs 5,00,000 crore. Bankers with high exposure to the power sector are concerned about the mid-sized companies, which will be impacted the most.
Most bankers assert that delays in providing coal supplies could affect the entire power sector
Indeed, most bankers assert that delays in providing coal supplies could affect the entire power sector. Most power companies would agree. Tata Power, for instance, had two coal blocks whose allocation has been cancelled. The company now says that it is looking forward to "opportunities of having a new legally enforceable framework for coal blocks which could be awarded, perhaps at an early time."