More time for resolution of stressed power firms proposed

If okayed, banks will get a year to rejig ₹1.74 lakh cr. of loans

An additional 180 days could be provided for resolution of 34 stressed power projects with a view to avoiding potential value erosion of operating plants, according to a government report.

As per the current RBI norms, banks need to restructure stressed assets within 180 days or six months. If the recommendations of the report, which was in compliance with the Allahabad High Court order are accepted, banks would get about a year for restructuring power sector loans of about ₹1.74 lakh crore.

The court on May 31 stayed the February 12 dated RBI circular on companies other than wilful defaulters and directed the Finance Ministry to hold a meeting of all stakeholders on resolutions.

June meeting

Acting on the direction, a meeting chaired by Financial Services Secretary Rajiv Kumar with all stakeholders was convened on June 22. On the basis of the meeting, a report was prepared and sent to the Power Ministry for further action.

According to sources, the report pointed out that the commissioned power plants with capacity of about 40,000 MW need to be considered differently to avoid potential value erosion and unreasonable haircut for banks. “For these commissioned assets, additional time of 180 days beyond the period permitted by the February circular before the case is referred to NCLT could be provided a window for optimising operations.” During this additional period banks should intensely monitor the assets and cash flow to save them from turning non-performing, it added.

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