NEW DELHI: Coal India Limited (CIL), India’s largest coal miner, on Monday announced the introduction of a uniform interest rate on delayed amounts of receivables, adjustments, and recoverable sums that remain outstanding after the due date.
The new interest rates will be effective from 1 October 2024. This marks a significant change from the previous practice of applying varying interest rates based on different Fuel Supply Agreements (FSAs). The decision to implement a uniform interest rate was approved by CIL's Board in late July 2024.
“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,” said CIL in a press note.
As per the revised rate, it is calculated as the Repo Rate of the Reserve Bank of India (RBI) as applicable on the due date of payment, plus 3%. CIL stated that this is significantly lower than the previous rates, which ranged between 9.5% and 14.85% under various FSAs.
All the new interest rates will apply to delayed payments beyond 30 September 2024. However, for payments due before that date, the interest rates will be charged as stated in the respective FSAs.
The company said the decision to implement a uniform interest rate comes in response to representations from coal consumers who sought a revision in the lopsided interest rates.
The new interest rate is based on the RBI Repo Rate, which is a benchmark interest rate reviewed by the country's Central Bank on a quarterly basis. This ensures that the interest rate remains competitive and aligned with broader economic trends.
CIL's long-term coal supplies to different customers are made under FSAs. For the fiscal year 2025, CIL's total annual contracted quantity (ACQ) under three FSA types is 705.7 million tons. The introduction of a uniform interest rate is one of several recent measures taken by CIL to improve its policies and practices for customers.