Indian Gov’t to Seek RBI Relief for Stressed Power Cos

Allahabad High Court disapproved the RBI relief to the private power companies taking into account the RBI February 12 circular upholding tighter bad loan norms.

Following an order by the Allahabad High Court declining to provide any interim relief to the stressed power sector firms, Indian Government is considering to ask Reserve Bank of India (RBI) for another 180 days relief for liable but stressed power companies.

Apparently, the government has took this initiative under the aegis of RBI’s section 7 which states that “the central government may from time to time give such directions to the bank as it may, after consultation with the governor of the bank, consider necessary in the public interest.”

Moreover, taking into account the RBI February 12 circular wide tighter bad loan norms, Allahabad High Court disapprove the RBI relief to the private power companies.

One of the officials close to development said, “We will seek views from cabinet secretary led committee on power sector on various options for resolving stress in the sector before approaching RBI as per the Allahabad High Court directions.”

Also, keeping a lenient view for the stressed power firms, the finance ministry opined that power firms with aggregate power capacities of 40 GW should be given relief even though they are in default.

“We had suggested that an additional period of 180 days should be provided, so that lenders can undertake more intensive monitoring of these assets and its cash flow,” said a finance ministry official requesting anonymity.

Source: ET