Allahabad high court to continue hearing on RBI circular on power companies tomorrow

The Allahabad high court will continue on Tuesday hearing of the case filed against Reserve Bank of India circular by power companies .
The court heard Reserve Bank of India counsel on Monday, sources said.

On August 14th, the power companies presented their arguments against the circular. The companies cited the 40th Parliamentary Standing Committee report that noted that the outcomes of RBI's revised framework with respect to the electricity sector have been disappointing with bank non-performing assets (NPAs) rising.

RBI has in all hearings declined the need for an extension sought by the power companies for completing resolution proceedings for stressed assets. The apex bank in a letter to the department of financial services also blamed the government for power sector NPAs through policies favoring the PSUs.

"The committee express its deep anguish over the situation and expect that RBI should have considered macro issues of electricity sector before finalizing the guidelines as the revised framework of RBI will not help the electricity sector in its revival prospects,” the 40th standing parliamentary committee report has said.

The total outstanding loans of scheduled commercial banks to the power sector (including renewables) stood at Rs 5.65 lakh crore at the end of March. Nearly 80% of this is accounted for by public sector banks and almost a fifth of this exposure is stressed on various counts, the committee report said.