Banks have not taken any haircut on their loans to Rashtriya Ispat Nigam Ltd (RINL) and will adhere to the same prudential norms for Mahanagar Telephone Nigam Ltd (MTNL), according to M Nagaraju, Secretary of the Department of Financial Services (DFS) in the Ministry of Finance. Speaking in a post-budget interaction with CNBC-TV18 on Saturday, February 1, he emphasised that public sector lenders are confident in managing these exposures within the existing regulatory framework.CompanyValueChange%ChangeNo haircut on RINL loans, MTNL liabilities under prudential normsRINL, which operates the Visakhapatnam Steel Plant in Andhra Pradesh with a 7.3 Mtpa liquid steel capacity, received a government-approved revival package of ₹11,440 crore on 17th January. This includes ₹10,300 crore in equity capital and the conversion of ₹1,140 crore in working capital loans into 7% non-cumulative preference shares, redeemable after ten years.
Meanwhile, public sector banks have an exposure of approximately ₹8,000 crore in bad loans to MTNL, with major lenders such as State Bank of India, Union Bank of India, Bank of India, and Punjab National Bank having already classified MTNL’s debt as non-performing assets (NPAs). However, MTNL’s financial obligations include ₹27,740 crore in bonds backed by a sovereign guarantee, mitigating the full impact of its liabilities.Government to ease FDI norms in the insurance sectorThe government is set to streamline foreign direct investment (FDI) norms in the insurance sector to enhance clarity and improve ease of doing business. “We will comprehensively address the FDI cap and simplify insurance regulations to create a more cohesive framework,” Nagaraju stated, highlighting a broader push towards financial sector reforms.As part of the Union Budget 2025-26, Finance Minister Nirmala Sitharaman announced a proposal to raise the FDI limit in the insurance sector from 74% to 100%, marking a significant step towards attracting foreign capital and boosting the industry’s growth.
