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Last Updated : Jun 01, 2018 03:16 PM IST | Source: Moneycontrol.com

Allahabad HC stays central bank circular on NPAs in power sector

Stressed assets to the tune of over Rs 1.8 lakh crore in the power sector have been a cause of concern for most lenders.

 
 
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The Allahabad High Court has stayed Reserve Bank of India’s February 12 circular on a resolution on non-performing assets (NPAs) in the power sector.

According to a CNBC TV18 report, the high court has said that no action will be taken by banks against power companies, except willful defaulters.

A circular released by RBI in February suggested that banks must come up with a resolution plan for all NPAs within 180 days of default on the banks’ books, failing which the assets must be sent for resolution to the insolvency courts under the Insolvency and Bankruptcy Code (IBC).

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Stressed assets to the tune of over Rs 1.8 lakh crore in the power sector have been a cause of concern for most lenders as a numerous policy and approvals had delayed certain projects which had led to defaults in many cases.

Taking cognizance of the parliamentary panel report on NPAs in the power sector, the high court directed the ministry of finance to hold a meeting with the power producers in June.

On Thursday, Power Finance Corporation (PFC), a state-owned financier to the sector, said it is working with State Bank of India (SBI) to come up with a resolution plan for 11 projects.

PFC is in talks with state governments to allow a power developer to take over control and manage operations through the sustainable portion of the debt, thereby reviving power firms.

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First Published on Jun 1, 2018 03:16 pm
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