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‘RBI norms may push power projects worth ₹2.5 lakh crore into bankruptcy’
Context
RBI’s move: The RBI has recently scrapped all loan restructuring programmes and it’s recent guidelines on ‘Resolution of Stressed Assets — Revised Framework’ mandates the banks to classify even a day’s delay in debt servicing as default
Impact
More than 50,000 MW of stressed power projects, worth more than ₹2.5 lakh crore, with bank exposure of more than ₹1.75 lakh crore, are likely to face bankruptcy proceedings
What are the underlying problems that need to be resolved?
Underlying stress factors include,
- Resolution of change in law cases
- Coal supply and its restrictive usage policy
- Absence of power offtake agreements
Government’s response
The government has called for a high-level meeting of all the stakeholders, including public and private sector power firms, lenders, coal suppliers and railways on Friday to discuss the gravity of the situation
