Coal Ministry Urges Department Of Financial Services To Classify Coal Under Infrastructure Sector

The ministry said the reclassification would help banks and financial institutions to make policies more effectively to cater to the increasing needs of the coal sector.

The coal ministry on Saturday called for a classification of coal under the infrastructure sector to help ensure the financing of commercial coal mines. The ministry requested the Department of Financial Services (DFS) to undertake the reclassification.

The ministry noted that the reclassification would help banks and financial institutions to make policies more effectively to cater to the increasing needs of the coal sector in a more time-efficient manner. The ministry further said that coal is expected to remain the primary source of energy in the foreseeable future, reported PTI.

In it’s statement, the ministry stated that banks have expressed interest in financing coal mines if the project viability and equity infusion visibility were clearly demonstrated via comprehensive business plans. The government further urged companies having coal mines to send in their take on how to determine the quantum of financing imperative towards mine development and operationalisation, in addition to the associated timelines meeting the requirements. The combined information has been shared with banks, and financial institutions to facilitate industry demands in a better manner. 

The ministry is also looking into certain reforms which will allow the sector to become more lucrative for investors. One such area identified by the ministry has been to secure financial assistance to operationalise coal mines. The government noted that industries have underlined the problems they face in getting financial support. With an increase in environmental, social, and governance (ESG) norms, majority of the banks and financial institutions are hesitant to join in projects related to coal, it said. 

As part of the reforms, the ministry added that now financial institutions are working towards developing board-approved policies to allow financial support in adherence with the development and operationalisation timelines. 

For the same, banks have also undertaken measures to identify nodal branches to act as a single window to cater to the financial needs of the coal industry. As such, the State Bank of India (SBI) has provided financial assistance for the development of one commercial coal mine and other banks are in the process of following the lead in the matter, the ministry said.