Representative image of coal.
Credit: Reuters Photo
New Delhi: The coal ministry on Saturday said it has requested the Department of Financial Services (DFS) to consider classifying coal under infrastructure sector, a move which will ensure financing of commercial coal mines.
This reclassification would allow banks and financial institutions to formulate policies more effectively to meet the increasing requirements of the coal sector in a time-bound manner, the ministry said while noting that coal is likely to remain a primary source of energy in the foreseeable future.
"Banks have expressed their willingness to finance coal mines, provided project viability and equity infusion visibility were demonstrated through detailed business plans," the ministry said in a statement.
The government has also invited response from companies having coal mines to determine the quantum of financing imperative towards mine development and operationalization, along with the associated timelines meeting the requirement. This collated information has been shared with banks, financial institutions to help address industry demands efficiently.
The coal ministry is implementing a series of reforms for making the sector more investor-friendly.
One key area of focus has been to secure financial assistance to operationalise coal mines, it said.
Industries have highlighted the challenges confronted in obtaining financial support from banks and financial institutions.
With the rising impetus of environmental, social and governance (ESG) norms, most of the banks and financial institutions are reluctant in engaging in projects related to coal.
However, the ministry said, banks and financial institutions are now in the process of formulating board-approved policies to extend financial support in line with development and operationalization timelines.
Banks have also undertaken steps to identify nodal branches that will act as a single window to meet the financing needs imperative for coal mine operationalisation. As of now, the State Bank of India (SBI) has extended financial assistance for the development of one commercial coal mine and others are under the process of doing the same.