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SC will hear a challenge for RBI's circular on bad loans on November 28



Section 7 of the Reserve Bank of India Act states that the Union Government may, in the public interest, give instructions to the central bank from time to time. Photo: Mint

Section 7 of the Reserve Bank of India Act states that the Union Government may, in the public interest, give instructions to the central bank from time to time. Photo: Mint

New Delhi: The Supreme Court will hear a challenge to the RBI Circular on Bad Credit on November 28. This question was mentioned by former State Prosecutor Mukul Rohatagi who appeared in the electric companies before the bench led by Judge Rohinton F. Nariman.

The High Court in Allahabad on August 27 denied temporary aid to power companies that challenged the RBI circular cycle of February 12 for bad loans.

In its circular document, the Central Bank tightened the standards for resolving non-performing loans by allowing lenders to initiate bankruptcy proceedings against outstanding bonds, in addition to setting deadlines for dealing with bad loans. Although banks had several options to come up with a resolution plan, they had 180 days to do so. The Central Bank also introduced the concept of a one-year non-performance of obligations, according to which banks must identify initial stress, even when repayment is lagging behind the day.

The court requested the central government to decide and take measures within 15 days, in accordance with Article 7 of the Reserve Bank of India Act. He also asked the high-level commission to decide on the resolutions within two months in consultation with the central bank.

Section 7 of the Reserve Bank of India Act states that the Union Government may, in the public interest, give instructions to the central bank from time to time.

The National Democratic Alliance (NDA) government established an authorized commission in July, headed by the secretary of the Cabinet P.K. Sinha, who was formerly the Indian Minister.

The country's energy sector was one of its highly reputable industries, with close to 1 trillion dollars of loans that turned into bad or were transformed. Around 66 gigawatts (GV) of capacity faces a varying degree of financial stress, including 54.8 GW coal-based power (44 assets), 6.83 GW of gas power (nine assets) and 4.57 GV of hydropower (13 assets) .

Borrowers also have an exposure of about $ 3 trillion to this property, after a slow supply of electricity over the last three to four years. According to RBI, the total outstanding loans of regular commercial banks in the electricity sector, including renewable energy sources, amounted to 5.55 trillion dollars in March 2018.


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