The ministry had earlier approached the central bank seeking relaxation from stringent RBI norms for the power sector, a source said. The minister further said the government was also planning to bid out about 40,000-50,000 MW of renewable power this year.
Power ministry’s meeting with Reserve Bank of India on the revised RBI norms for bad loans scheduled for today has been postponed. “It (the meeting) has been postponed. (The meeting will take place) some other day,” Power Minister R K Singh told reporters on the sidelines of a function. The ministry had earlier approached the central bank seeking relaxation from stringent RBI norms for the power sector, a source said. The minister further said the government was also planning to bid out about 40,000-50,000 MW of renewable power this year. Reserve Bank had come out with ‘Resolution of Stressed Assets-Revised Framework’ on February 12, 2018.
Post this circular, all other RBI guidelines for handling short-term and long-term issues regarding loan management (flexible structuring of loans-5/25 scheme, SDR, S-4A, CDR scheme etc.) have been withdrawn. According to the circular, even a one-day default in debt servicing would require reporting to RBI and implementation of Resolution Plan. All accounts with exposure of Rs 2,000 crore and above, on or after March 1, 2018 and in default have to formulate a resolution plan within 180 days failing which the case has to be mandatorily referred to NCLT for Insolvency and Bankruptcy Code (IBC) proceedings.
The Association of Power Producers had written to RBI and Prime Minister Narendra Modi that more than 75,000 MW assets – under operation or under construction – are severely stressed due to reasons including lower availability of coal, pending receivables from discoms, among others. It said there are Rs 8,300 crore of receivables currently and more than two years of delay in receiving orders from Regulatory Commissions to pass on the increase in cost of coal due to various taxes and duties which are to be treated as ‘Change in Law’.
Also, around Rs 7,800 crore is stuck as regulatory receivables due to delay in orders and dispute being raised by discoms at the higher court, and this amount is increasing progressively. The association also drew attention towards short supply of coal as Coal India supplies only 60 per cent of fuel required. It also sought to extend the implementation period of Resolution Plan from 180 days to one year as “the current timeline to complete the resolution plan is extremely difficult.”
The association demanded that RBI should relax “default” clause from one-day delay in debt servicing and classify the asset as NPA (bad loan) only after the completion of 180-day period.