10 Mid-sized PSU banks to be most affected due to coal block cancellation

Ten mid-sized public sector banks will be most affected by credit costs arising out of the recent Supreme court judgement cancelling coal blocks allocated between 1993 and 2010, while larger public sector banks are better placed to handle the fallout according to report from India Ratings and Research Pvt. Ltd

Most private sector and large public sector banks are better placed in handling credit costs arising out of this development with sufficient operating and capital buffers. However, 10 mid-sized public sector banks will be affected the most with their thin operating margins and weaker capitalization, the rating agency said.

Ten mid-sized PSUs included in the report are -- Allahabad Bank, Andhra Bank, Central Bank of India, Dena Bank, IDBI Bank, Indian Overseas Bank, UCO Bank, Union Bank of India, United Bank of India and Vijaya Bank.



According to India Ratings, the committed funds to power projects affected by the judgement are close to Rs.1.4 trillion, with the committed exposure of banks is estimated at around Rs.90,000 crore (accounting for around 1.2% of banking system loans).

Larger public sector banks such as State Bank of India, Bank of Baroda, Bank of India, Canara Bank Ltd and Punjab National Bank account for 46% of this exposure compared with 39% for the 10 mid-sized lenders.