Coal India introduces uniform interest rates on delayed receivables for FSA customers

Taking a consumer-friendly approach, state-run miner Coal India will apply uniform interest rates on delayed amounts of receivables, adjustments and recoverable sums that remain outstanding after the due date for its FSA (Fuel Supply Agreements) customers, effective October 1.

Earlier, the interest rates on delayed amounts of receivables were skewed, with wide variances even for the same generating company that had different FSAs with Coal India (CIL). “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,” the coal major said in a stock exchange filing on Monday.

Taking cognizance of representations by coal consumers who had sought revision in the “lopsided” interest rates, CIL has levelled the differences and brought in a uniform rate.

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Nod from Board

Coal India’s board had given its nod for parity 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 the repo rate of Reserve Bank of India as applicable on the due date of payment plus 3 per cent. 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 per cent and 14.85 per cent under several FSAs,” the company said in the filing.

The central bank reviews repo rates on quarterly basis. The new interest rates are applicable for the delay in payments beyond September 30, 2024. The interest rates for the period till September 30 will be charged as stated in the FSAs.

Apart from the variances in interest rates on delayed amounts of receivables, 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,” Coal India said in the filing to the bourses.

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CIL’s long-term coal supplies to different customers are made under FSAs. For FY25, Coal India’s total annual contracted quantity (ACQ) under three FSA types is 705.7 million tonnes (MT).

Coal India, the world’s largest coal producer, has recently introduced a slew of measures to ease the policies for its customers.

In August, CIL paved the way for allowing coal supplies beyond annual contracted quantity (ACQ) to the country’s thermal power plants, including independent power plants (IPP). With this, the miner did away with the earlier provision which had allowed coal supplies up to a maximum of 120 per cent of ACQ to power plants and IPPs.

On Monday, CIL scrip ended the day at ₹510.10 apiece on BSE, which was down 1.15 per cent from the previous close.