NEW DELHI: Despite the 15-day timeline given by the Allahabad High Court to the Centre to decide and take action on power sector NPAs under Section 7 of RBI Act, the government seems likely to leave the 'mess' to the RBI and the banks.
According to government sources, neither the Finance nor the Power Ministry has a roadmap for the knotty problem yet. On August 27, the Allahabad High Court had refused to give any relief to independent power producers against the February 12 circular of the RBI, which specified that if a resolution was not found by August 27, these accounts should be sent to bankruptcy courts.
The court also mandated initiating insolvency proceedings by lenders against defaulting projects and gave 15 days to the Centre to decide and take action under Section 7 of RBI Act. However, sources in the Finance Ministry said that the government would rather let RBI take any necessary course of action.“We had different views on power sector NPAs. But if the RBI has taken that stand, we would let them go ahead with it... Hope they remain pragmatic on what they do,” a senior official from the Finance Ministry told TNIE. He added that the Power Ministry is yet to give them their final report on the sectoral impact of the move and until then, it would be difficult for the ministry to come up with a concrete plan.
“Everyone has different figures on impact and we are working with the Power Ministry on numbers. One solution where most stakeholders including RBI agree is to form a public sector AMC that manages banks’ NPAs either directly or by bidding at NCLT auctions. But that will mean infusing capital, which would not be easy,” the official added.
Meanwhile, Finance Ministry’s Principle Economic Advisor Sanjeev Sanyal said that “the matter is being discussed and a decision is being made. We will look at all options and take appropriate action.”
Economic Affairs Secretary S C Garg also told reporters on Thursday that there is a panel headed by the Cabinet Secretary which will take a call on whether to invoke Section 7 of the RBI Act or not.