The proposal of coal banking arrangement, which was mooted by the Association of Power Producers (APP), has been referred to the union law ministry for its opinion. According to APP, this could increase the domestic supply and thereby reduce imports.

The law ministry would study the various legal issues involved with the idea of coal banking send its opinion to the coal ministry.

Under the proposal, which is also being considered by the BK Chaturvedi committee, captive block can supply excess coal to the nearest mine of a Coal India subsidiary and get the same quantity back when it needs the coal later.

This would help CIL in meeting its coal supply commitments to user industries and smoothen availability.

India's domestic output has failed to keep pace with demand, despite being world's third largest producer of coal and fifth largest in terms of reserves. This led to an import of coal worth $16 billion last fiscal that have contributed to the current account deficit.

The government is studying whether it is a reasonable concept in terms of legality of it and financial viability and whether it would be fair for the government to use the coal banked with Coal India.

The government had allocated 216 coal blocks with reserves of over 50 billion during 2005-09 to private users.