Rs1.2tr bank loan secured to settle circular debt

The government on Wednesday signed loan facilities worth approximately Rs1.225 trillion with 18 banks to settle the outstanding dues of Independent Power Producers (IPPs) parked in circular debt. These dues will be serviced through a Rs3.23 per unit surcharge on consumers for a period of six years. The signing ceremony was held at the PM Office, witnessed virtually by the prime minister from New York. No official announcement was made, although ministers confirmed the signing of the agreement. Under the agreement, the government will have 30 days to request disbursements from banks for prompt utilisation to avoid penalties. Any withdrawal request not fully used within the period will lapse. After the request is made, the government will have three months to draw down the approved funds.