"We were in fact expecting that both coal and gas risks would come down. It might well be the case that the risk has not come down, it has in fact gone up and therefore, from our perspective, till that risk actually comes down, our objective is to provide against those risks," IDFC Managing Director and Chief Executive Vikram Limaye told reporters.
"We do not want to get into a situation wherein the first full year of the bank being operational, we end up taking large provisions for risks which we were fully aware of before the transition to a bank," he said, adding that the provisions will go up over the next two quarters.
Elaborating on IDFC's concerns, Limaye said with regard to gas, the company's review suggests that borrowing plants may not be in a position to repay fully because of the way the new policy is structured.
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On coal, he pointed out to the uncertainty on whether the negative bids put in by the bidders would actually be permitted in pass-through in tariffs to power consumers, adding that there is a looming threat of litigation as a result of the same.
It also took a decision to allocate coal blocks through auctions and has conducted two auctions so far, garnering over Rs 2 trillion.