New Delhi: India’s power sector is unlikely to get any relief from the Reserve Bank of India’s (RBI’s) stressed assets circular, with the central bank maintaining that it was possible to restructure stressed assets within the prescribed framework.
This comes at a time the government is engaging all stakeholders in the power sector after the Allahabad high court last month directed the central government to address the problems faced by the ailing power sector in light of the central bank’s 12 February circular.
“The RBI maintains that the circular does not stop restructuring. Even if there is a default, restructuring is possible within the given time frame," a senior government official said after a meeting of all stakeholders. “They are saying if you have a resolution plan, stick to it and maintain it."
RBI had tightened norms for bad loan resolution by setting timelines for resolving large non-performing assets, failing which banks were asked to mandatorily refer them for insolvency proceedings.
The central bank also withdrew existing debt restructuring schemes such as SDR and S4A. The country’s power sector is seeking a differential treatment from the norms.
The power sector was on Monday asked to come up with suggestions for resolution of the problems faced by it, said the senior government official quoted before.
Some of the other ideas being floated to resolve stressed assets of the power sector include a suggestion by the Rural Electrification Corp. Ltd to form an asset management company to house the nearly ₹ 1.8 trillion of stressed assets.
“We are looking for a moratorium where sectoral issues can be resolved," said Harry Dhaul, director general of the Independent Power Producers Association of India.
“We also suggested the setting up of a task force for the power sector and there was broad consensus on this," he said. “However, RBI sticks to its stand on their 12 February circular."
PTI contributed to this story.