FinMin may hold talks on power sector bad loans

NEW DELHI: The Finance Ministry may soon hold talks with the Reserve Bank of India to resolve issues faced by the power sector and also seek some relaxation of the February 12 NPA guidelines, sources said on Monday. The ministry would consult the RBI as per the Allahabad High Court order, which today refused to give any interim relief to private power companies from the RBI's February 12 order on NPAs. According to sources, around eight-nine commissioned power projects will be impacted by the Allahabad High Court order and banks have mostly provided for these stress projects. In a bid to hasten the resolution of bad loans, the RBI on February 12 abolished half a dozen loan restructuring schemes and instead provided for a strict 180-day timeline for banks to agree on a resolution plan in case of a default or else refer the account for bankruptcy. Independent power producers had challenged the RBI order which mandated the lenders to initiate process under IBC if resolution plan is not approved by August 27. The high court also said that the central government shall consider initiation of the consultative process contemplated under Section 7 of RBI Act, and conclude the same within 15 days from on Monday. The Finance Ministry can consult RBI as per the provisions of Section 7 of The Reserve Bank of India Act, 1934. As per the Act "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." The Finance Ministry could ask the RBI to provide 180 days for resolution of stressed power projects with a view to avoiding potential value erosion of operating plants.