Govt allows discoms to convert liabilities into bonds

New Delhi, Jun 27 (KNN)  The government has approved of the financial restructuring of state owned power discoms to allow the conversion of 50 per cent of their outstanding short term liabilities (as on March 31, 2012) to banks into bonds.

These bonds will be issued by discoms and will be serviced by them for a specified initial period until they are taken over by the state governments in a phased manner.

However, these bonds will be duly backed by guarantees of the respective state governments, till the time their liabilities are taken over by them from the discoms.

While issuing guarantee to the discoms for issuance of bonds, the state governments are required to take into consideration their respective guarantee limits as per relevant act and rules, if any.

These bonds are to be acquired by banks under special circumstances to be issued and serviced by state discoms with the guarantee of the respective state governments during the initial period.  (KNN)