The Reserve Bank of India (RBI) held its ground and refused to give any special relief to the power sector from its February circular that mandates early detection and time-bound resolution of stressed assets. The banking regulator highlighted that apart from financial issues, the stress in the regulated power sector also stems from externalities such as irregular payments from electricity distribution companies, shortage in fuel supplies and regulators delay in raising power tariffs. The RBI’s February circular requires banks to finalize a resolution plan in case of a default on large accounts of Rs.2,000 cr. and above within 180 days (irrespective of sector), failing which insolvency proceedings will have to be invoked against the defaulter.

(Financial Express)