NEW DELHI | Jul 26, 2016: The government has approved payment of Rs 216 crore to lenders of cancelled coal blocks, which is just over 2 per cent of coal miners' estimates of Rs 10,000 crore exposure of banks to the mines.

The nominated authority for coal mine auctions will release the payment to settle dues of five banks including ICICI Bank, State Bank of India, Punjab National Bank, UCO Bank and IDBI Bank toward compensation of land and mine infrastructure, a senior government official said.

"The amount that has been lent by the banks to prior allottees of coal blocks is surprisingly not a very large amount. At the time of cancellations of coal blocks, the prior mine owners said the banks' exposure to the blocks is about Rs 10,000 crore," the official said.

The coal mines were cancelled subsequent to a Supreme Court order in October 2014. Banks had claimed Rs 743 crore as settlement for loans against about 10 coal blocks, the official said. The coal ministry has found claims of onlyRs 216 crore as valid. It has not approved loans banks sanctioned to prior coal block allottees for setting up attached power, steel and cement plants. The coal ministry had issued notices seeking claims from banks toward dues pending by prior coal block owners, to which lenders to only 10 coal mines responded.

The payments will be made directly to the banks with prior information to the previous coal block allottees. The DELHI High Court has allowed the nominated authority to release payments to banks as compensation toward loans taken for land and mine infrastructure by previous coal block owners, the official said.

About 25 cases are pending in the high court related to previous owners seeking higher compensation for land and the assets deployed at the blocks. The court has completed hearings and reserved its verdict since April last year. The coal ministry has releasedRs 105 crore as compensation towards costs incurred by previous allottees for obtaining geological reports and other essential surveys.

The ministry in the first tranche released Rs 677 crore to previous coal block owners including Hindalco, GVK Power, Jindal Steel & Power Ltd, Usha Martin, Jayswal Neco and Abhijeet Infrastructure for 19 auctioned mines as compensation for expenses incurred on obtaining the reports. The nominated authority had taken this money from successful bidders at the time of auctions and allotment and has now released it to the previous owners.

(Source: http://economictimes.indiatimes.com/)