Abhishek Manu Singhvi Gave A Big Relief To The Companies Holding 2.5 Lakh Crore Rupees Loan, Supreme Court Quashed RBI Circular
The Supreme Court canceled the
2018 strong circular of the Reserve Bank of India (Tuesday) (April 2) giving
relief to the power companies stuck in the financial crisis, in which there is a provision to declare
the company to be bankrupt at a one-day lapse in repaying the loan. This
decision of the Supreme Court has provided relief to 75 companies, which was in
debt of Rs 2.24 lakh crores.

However, this order of court can
slow down the bankruptcy proceedings. This decision can affect the process of
early settlement of trapped loans under the circular. Banks may have some
flexibility in relation to the restructuring of debt-trapped in the recovery.
The Reserve Bank had issued
circular on February 12, 2018, and said that banks will have to initiate a debt
settlement process within 180 days in case of default in debt cases of Rs 2,000
crore or more.
It was stated that if no solution
can be found in the prescribed period, non-executed accounts should be placed
before the National Company Law Authority under the Bankruptcy and Debt
Disposing Inability Act.
Organizations of GMR Energy Ltd.,
Ratan India Power Ltd., Association of Power Producers, Independent Electricity
Products Organization IPPA, Sugar Manufacturing Association of Tamil Nadu and
Gujarat companies of the ship making companies had filed petitions in different
courts against the circular.
The power sector argued that the
debt of Rs 5.65 lakh crore (in the case of March 2018) is due to factors which
are beyond their control. Such as the availability of fuel and coal block
allocation cancellation. Earlier, the Supreme Court had banned this circular on
September 11 last year.
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