6 March 2019: The Reserve Bank of India’s (RBI’s) February 12, 2018 circular asking banks to move insolvency petitions against large non-performing assets (NPAs) that have not been resolved, is based on a ‘one-size-fits-all’ approach without taking into consideration factors such as the reasons for non-payment, power companies told the Supreme Court on Wednesday.
There is no distinction between the kinds of debtors, the reasons for non-payment of the debt or consideration for external factors influencing the sector, senior advocate Abhishek Manu Singhvi, appearing for one of the power companies told the court.
The discretionary power of banks to decide whether an account would turn non-performing asset (NPA) or not had also been taken away by the RBI owing to the circular, he said.
Citing that in their case, the supply side as well as the demand side was under the watchful eyes of regulators, the power companies on Wednesday said that the sector should have been exempted from the RBI’s diktat.
“On the supply side, there is a shortage of coal. How do I get coal? And if I get coal, whether I will get linkages or not is another question. On the demand side, I cannot increase my tariff. Even if I approach the regulator to seek permission to do the same, it would take at least 2-3 years,” the counsel appearing for one of the power companies told the court.
Even within the power sector, there was a huge difference between the condition of public and private companies as the dues of the latter was not cleared on time by states and power distribution companies (discom) on time, he said.