Banks and institutions like Power Finance Corporation (PFC) and Rural Electrification Corporation (REC) had stopped lending to discoms. With new criteria set out by the power ministry, PFC and REC have resumed lending. These include regular rate revisions and maintenance of audited accounts, for a discom to be eligible for access funding. This may also deter state governments for forbidding rate rises, beside helping ensure sound financial health of the utilities.
A committee has been set up under the Planning Commission member B K Chaturvedi to formulate a turnaround plan for ailing discoms. It would consider the recommendations of the Shunglu committee, made last month, on the financial health of discoms. The Shunglu panel had suggested an SPV as a corporate entity to buy out distressed debts of banks to ailing discoms.