Distressed assets: Independent power producers urge RBI to extend deadline for filing resolution plans

Independent power producers (IPPs) have reportedly asked the Reserve Bank of India (RBI) to extend the deadline for freezing resolution plans for defaulting projects, to 16 November, 2018, as against 27 August, 2018. The reason – the RBI delayed the release of a list of authorised credit rating agencies, vital to the process, reported the  Financial Express. While the identification of defaults was to begin on 1 March, 2018, a letter from the Association of Power Producers, addressed to RBI Governor Urjit Patel, has pointed out that the central bank released a list of authorised credit rating agencies only on 21 May, 2018, ‘reducing the time available to implementing resolution plans by 82 days’, the newspaper added. 34 distressed power plants worth some Rs 2.5 lakh crore, with a combined capacity of 39 GW, were expected to finalise resolution plans by end-August. Separately, a report submitted to the power ministry has recommended that an additional 180 days be provided for the resolution of the 34 stressed power projects, with a view to avoiding potential value erosion of operating plants. As per current RBI norms, banks need to restructure stressed assets within 180 days or six months. If the recommendations of the report that was in compliance of an order of the Allahabad High Court (HC) are accepted, banks would get about a year for restructuring their power sector loans. With inputs from PTI