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Power sector woes: Government mulls easing RBI's NPA norms

IANS  |  New Delhi 

The Centre proposes to recommend that the RBI make some in its norms on non-performing assets (NPAs), or bad loans, of banks, failing which up to 70,000 MW of power projects will go under proceedings, the (APP) said on Friday.

NPAs in the power sector, which account for the major chunk of bad loans, was a main item in the agenda of a meeting held here on Friday between Power and private power producers, including GMR, Adani Power, JSW Energy, and as well as state-run NTPC and the power financing arms of the ministry -- PFC and REC.

"We discussed the implications of the RBI (Reserve Bank of India) circular on NPAs which if implemented in letter and spirit would lead to between 60,000-70,000 MW of power projects going for bankruptcy," APP told reporters here following the meeting with the

Noting that the new RBI norms on resolving the NPAs issue were too rigid, Khurana said the power producers had apprised the of the serious problems being faced by the industry in the way of coal shortage and the huge bill outstandings due from state distribution companies (discoms).

He said the producers had also presented a proposal for a "bill discounting scheme" in respect of the outstanding dues of discoms.

As per the RBI's revised framework on NPAs banks are required to classify even a day's delay in paying loan instalments as a default. Producers say this is too stringent for power companies, pointing to how they pay for coal in advance but discoms take 90-150 days to pay for the power.

According to sources, such a recommendation for RBI to relax on the NPA norms could be put up through the

Meanwhile, the (PFC) has approached the (NCLT) to start insolvency proceedings against promoters of stressed power projects, officials said.

The PFC and other consortium lenders have filed appeals with the NCLT under the new Insolvency and Code (IBC) in some of the cases which include thermal, gas-based as well as hydro power projects, PFC officials said.

told reporters last week that the PFC and (REC) Ahave been directed not to grant loans to discoms making heavy losses unless these submit time-bound plans for reducing such losses.

A Parliamentary panel report has revealed that there are as many as 34 with a total capacity of over 40,000 MW.



(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Fri, March 16 2018. 20:52 IST