Biggest drop in power demand makes Indian banks' bad debt headache worse

The biggest drop in India’s electricity demand in at least 12 years is hindering efforts of Indian lenders to recover a pile of loans to power producers that have soured.

Banks had about Rs 1.8 trillion ($25 billion) of stressed loans to India’s coal-fired power generators as of last year, according to the State Bank of India. Prospective bidders for these stressed generators are wary as demand from the country’s power distribution utilities contracted in three straight months to October.

India’s electricity demand is closely linked to its industrial output, which contracted in September to its lowest level in eight years. An