New Delhi, Aug 28 (IANS) The government is considering its options in the wake of the Allahabad High Court’s refusal to entertain the power producers’ petition challenging the RBI deadline for starting bankruptcy proceedings against banks’ NPAs, or bad loan accounts, a senior official said on Tuesday.
A Reserve Bank of India (RBI) circular had in February directed the banks to take loan accounts of Rs 2,000 crore and above, which remain unresolved for over 180 days starting from March 1, 2018 to the National Company Law Tribunal (NCLT) under the new Insolvency and Bankruptcy Code (IBC). The deadline expired on Monday.
The power sector accounts for the major chunk of banks’ non-performing assets (NPAs) and power producers had approached the Allahabad High Court for quashing the RBI circular.
Rejecting the power producers’ plea on Monday, the court asked the Central government to talk to the RBI for providing some relief to the petitioners within 15 days.
“The matter (power producers’ problems) is being discussed and a decision is being made,” Finance Ministry’s Principle Economic Advisor Sanjeev Sanyal told IANS here.
“We will look at all options and take appropriate action,” he added.
Banks had been working overtime to finalise the resolution plans before expiry of the RBI deadline for around 70 large stressed accounts worth over Rs 3.8 lakh crore, and they have another 15 days’ time to decide on taking them to NCLT for bankruptcy proceedings.
Around half of these 70 assets are from the power sector with a total bank exposure of around Rs 1.74 lakh crore.
According to the RBI, the total outstanding loans of scheduled commercial banks to the sector, including renewable energy, stood at Rs 5.65 lakh crore as in March 2018.
A parliamentary panel report has revealed that there are as many as 34 stressed electricity projects with a total capacity of over 40,000 MW.
The power producers had petitioned the government that the RBI norms on resolving the NPA issue were too rigid in view of the serious problems being faced by the industry in terms of coal shortage and huge bill outstandings from state distribution companies.
The Power Ministry had urged the RBI to extend the deadline by six months, but the central bank has rejected the extension request.
The Parliamentary Standing Committee on Energy in its report earlier this month noted that the new RBI guidelines on NPAs will only deepen the crisis of the electricity sector.