RBI deadline for resolution of ₹ 3.8 trillion in NPAs ends today

New Delhi: With the deadline set up by Reserve Bank of India for resolution of stressed assets worth around ₹ 3.8 trillion coming to an end today, all eyes are on the expected Allahabad high court judgement on a clutch of petitions against the central bank’s 12 February circular. The Allahabad High Court had earlier ordered lenders to avoid acting against power producers after they sought relief against RBI’s new stress resolution norms. The vexed issue caught the attention of the standing committee on energy which in its report titled ‘Impact of RBI’s Revised Framework for Resolution of Stressed Assets on NPAs in the Electricity Sector’ earlier this month noted that the new guidelines of the central bank will only deepen the crisis of the electricity sector and said, “The Committee are of the opinion that the constraints of sectoral issues should be taken into account otherwise the whole exercise will remain only a sophistry.” A total of 34 coal-fuelled power projects, with an estimated debt of ₹ 1.77 trillion, have been reviewed by the government after being identified by the department of financial services. Given the stakes involved, the state-run Rural Electrification Corp. Ltd has identified projects with a total debt of around ₹ 1.8 trillion as part of Power Asset Revival through Warehousing and Rehabilitation, or ‘Pariwartan scheme, to warehouse stressed power projects totalling 25,000 MW under an asset management firm to protect the value of the assets and prevent their distress sale under the insolvency and bankruptcy code till demand for power picks up, Mintreported on 21 June.