NEW DELHI: In a big relief to the power sector, the Supreme Court on Tuesday stayed the Reserve Bank of India’s (RBI) February 12 circular, preventing initiation of insolvency proceedings against its stressed power assets. The stay came exactly on the last day for bankers to refer unresolved NPA cases to the insolvency court.
The court has asked the RBI and other parties to maintain status quo with respect to insolvency proceeding against power companies, which means that the RBI’s circular stays for now.
Hearing the plea filed by the RBI, which sought transfer of all cases filed against its February circular to the Supreme Court, the apex court on Tuesday has transferred all pleas filed before different High Courts to itself. The RBI’s plea will be heard on November 14.
The court also ruled that no case can be filed anywhere now including in the National Company Law Tribunal (NCLT), which may delay the process of insolvency in the power sector. So far, private power companies, bank employees and textile associations had filed about a dozen cases against the circular in various High Courts.
The RBI circular (on the revised framework for the Resolution of Stressed Assets) had scrapped various loan restructuring schemes. This required lenders to file insolvency petitions against several stressed power units before the NCLT by Tuesday.
The power producers had earlier moved Allahabad High Court against the RBI circular, but were disappointed as the High Court, in its August 27 verdict, refused to set aside the RBI circular. “The order would provide time for bankers to finalise resolution plan for about 13 GW of projects that are presently in their final stages and HLEC, under the chairmanship of Cabinet Secretary, is to submit its report on corrective actions that the government intends to initiate to mitigate stress factors,” said Ashok Khurana, Director General of Association of Power Producers.
PEF Q1 net profit surges 22% to L1,373 crore
New Delhi: Power Finance Corporation on Tuesday posted over 22 per cent jump in its standalone net profit to I1,373.26 crore in the quarter ended June 30, 2018. The company’s net profit in the same quarter a year ago was 1,122.43 crore.