Business India

34 Electrical Power plants may face Bankruptcy, RBI deadline ends on 27 August

Written by Abhishek Lohia

For the power sector next 15 days are very crucial as the RBI Deadline against Debt. has been ended on 27th August. The deadline set by the Reserve Bank of India (RBI) ended on August 27 (Monday). The 34 power companies, including Reliance Jindal, JP Power Venture, Prayagraj Power, Jhabua Power, KSK Mahanandi, stuck in debt. The bank has declined to give them a moratorium. Banks have over Rs 1.5 lakh crore on these 34 power companies. Reserve Bank of India, in February 2018, clarified in a circular that if 70 companies drowning in debt are delayed in repaying it, will be called them defaulter, their loan amount will be declared as NPA (trapped loan). It is called ‘one-day default norm‘ in technical language.

It was implemented from 1 March 2018. Banks were given 180 days from March 1, 2018, to complete all previous cases which were completed on Monday (August 27). During this period, the accounts of all those companies which have not been settled between companies and banks can be forced to join the process of declaring bankruptcy. A total of 3800 billion rupees of banks are liable to these accounts. RBI has given 15 days time to these 70 companies so that they can apply for their attorney and resolution professional. If the companies offer any solutions in these 15 days and all those lending banks are approved, then these accounts will not be sent to the courts.

State Bank Chairman Rajneesh Kumar said that the timelines will not have any impact on the provision of banks as the banks are already engaged in the process of resolving these accounts. Apart from the Annual General Meeting of the Indian Banks’ Association (IBA), Kumar said, “The provisions of the deadline of August 27 will not have any substantial impact on the requirements as most of them have been classified as immersed in debt. Kumar said that 16 of the 34 distressed power companies have already been sent to NCLT, their total value is $ 1740 billion and in seven cases the solution process is in the final stages.

Finance Minister Arun Jaitley has said that during the UPA Govt, the high economic growth figures and the floods of banks (NPAs) are actually due to the indiscriminate debt has given before and after the global debt crisis of 2008. After this, the outrages came between BJP and the opposition Congress about the figures of economic growth during the UPA government, Jaitley said that the growth of that time was an indiscriminate loan. Bt that time, Banks provided loans to unrealistic projects, due to which the NPAs have reached 12% in the banking system. For these reasons, macroeconomic problems arose in 2012-13 and 2013-14.

Now, the Ministry of Finance can soon interact with the Reserve Bank to resolve issues of the power sector. Under the order of the Allahabad High Court, the Ministry will consult with the RBI. The court refused to give any interim relief to the private power companies by the order of February 12 on the NPA of RBI. Eight-nine power projects could be affected after Allahabad High Court’s decision on this issue.

India’s Electric Power Crisis, India’s looming power crisis, India’s power sector, economic growth of India, Coal supply by Coal India Ltd, CIL, coal-based thermal plants, Installation of power plants, primary energy supply, energy efficiency and demand side management, Energy Alternatives

About the author

Abhishek Lohia

Abhishek Lohia was a Sports and Political Writer working for Newsfolo and is no longer associated with the organization.

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