(Eds: Correcting word ’empowered’ in headline) New Delhi, Aug 29 (PTI) The Reserve Bank has been invited to attend the meeting of the empowered committee for resolution of stressed power assets to be held on August 31, Union minister R K Singh said today. Also Read - These States May go Under Lockdown Amid COVID-19 Spike | Full List
The government last month set up the committee chaired by Cabinet Secretary with representatives from ministries of railways, finance, power, and coal, and lenders having major exposure to the power sector. Also Read - UP: 10 killed, 40 Injured As Truck Falls Into Gorge in Etawah, CM Yogi Announces 2 Lakh Compensation
On RBI’s role in resolution process, the Union power minister said, “RBI has been called to attend this meeting on August 31.” Stressed power assets worth around Rs 1.74 lakh crore are feared to undergo bankruptcy proceedings after the Allahabad High Court on Monday refused to give any interim-relief to private power companies from the RBI’s February 12 circular on new NPA framework. Also Read - Guidelines Issued For Kashi Vishwanath Temple in Varanasi. Details Here
The high court also suggested that the power ministry should invite a senior representative of the RBI as a member of the empowered committee. It has asked the panel to submit report in two months from the date of formation.
The Reserve Bank in its February 12 circular had said if a resolution was not found by August 27, NPA accounts should be sent to bankruptcy courts.
The minister, however, pointed that he does not see stress to spread in the power sector.
“The committee will deliberate on it (NPA resolution). I don’t see stress cascading or anything like that. Good thing is that demand is increasing. So there is more space to generate extra (electricity).” The RBI’s new framework provides that lenders have to provide for resolution plan within 180 days in case of large account of Rs 2,000 crore and above even at the default of a day.
In the absence of resolution plan the project would go to National Company Law Tribunal (NCLT) under Insolvency and Bankruptcy Code.
When asked if the government would invoke Section 7 of the RBI Act, as suggested the high court, the minister said that the finance ministry can answer that question.
About resolution of stressed assets without going to the NCLT, the minister said, “By and large this is something for the lenders to decide and they have to decide according to the Acts and Regulations laid down by the RBI.
“So they will decide. There are some mechanisms which have been moved. One is Samadhan and other is Parivartan. So we will see how it works out.” A senior official present on the occasion said, “For resolution of the stressed assets without initiating bankruptcy proceeding, the lenders should come on board.” Under the Samadhan initiative of State Bank of India, Tata Power’ joint venture Resurgent Power Ventures is acquiring Prayagraj Power Generation Company (PPGCL) from its lenders. The Samadhan is mechanism led by SBI in the projects where it is lead banker. The 3X660 MW coal-based power project in Uttar Pradesh is the first stressed power asset account resolved by the lenders under Samadhan.
This is published unedited from the PTI feed.