New Delhi: Starting October 1, Coal India Limited (CIL) will be applying uniform interest rates on delayed amounts of receivables, adjustments and recoverable sums that remain outstanding after the due date, said the company on Monday. This is being done to fix the ‘lopsided’ interest rates which were earlier skewed with wide variances even for the same generating company that had different Fuel Supply Agreements (FSAs) with CIL, said the PSU. “The policy tweak is for coal sold under different FSAs and schemes. This is yet another consumer-friendly approach by CIL enabling ease of business,” said the coal miner in a statement on Monday.
CIL’s Board of Directors had given its nod for parity in interest rates in the last week of July 2024, amending the definition of interest rate mentioned in the body of FSAs.
CIL’s revised interest rate is Repo Rate of Reserve Bank of India (RBI), as applicable on the due date of payment, plus 3 percent. “This would be much lower than earlier rates easing the customer stress. Prior to the revision, interest rates for delayed payments used to hover between 9.5 percent and 14.85 percent under several FSAs. Repo rates are reviewed by RBI on quarterly basis,” said Coal India.
“The new interest rates are applicable for the delay in payments beyond 30th September 2024. The interest rates for the period till 30th September 2024 shall be charged as stated in the FSAs. Taking cognizance of representations by coal consumers who sought revision in the lopsided interest rates, CIL had levelled the differences and brought in a uniform rate,” it added.
Differently-ranged bank lending rates was also viewed as a factor that may be disputed by the customers while paying interest on late payment. RBI Repo rate being a benchmark and periodically reviewed by the country’s Central Bank, was considered in making a uniformly applicable rate of interest across different types of FSAs, said CIL.
CIL’s long-term coal supplies to different customers are made under FSAs. For FY2024-25, CIL’s total annual contracted quantity (ACQ) under three FSA types is 705.7 Million Tonnes (MT). As per pre New Coal Distribution Policy FSAs are to the tune of 226.3 MT, whereas Post-NCDP, including SHAKTI and non-regulated sectors, account for 476.3 MT. SHAKTI B (iv) and B(v) constitute 3.1 MT. Recently, CIL has introduced a slew of friendly measures easing the policies for its customers and the measure to levy a uniform interest rate is part of that initiative. In August, Coal India, which is India’s largest coal mining company owned by the government, agreed to supply more coal to power plants beyond their annual contracted quantities. Earlier, in July, CIL eased norms for e-auction and asked its subsidiaries to ramp up auction sales.
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