As many as 34 power companies have accumulated Rs 1.4 lakh crore of NPA for Indian banks while 41 corporates across sectors, including those from infrastructure, textile, telecom, sugar, steel, energy, power and fertilisers have Rs 84,000 crore piled up NPAs which have taken the bad loan total to astronomical Rs 2.24 lakh crore, petitioners opposing RBI's February 12 circular on resolutions of debts have submitted to the Supreme Court.
Quoting a report of the 37th Standing Committee on energy giving NPA details of 34 power plants, the petitioners said these plants which have number of banks ranging from 2-19, have accumulated over Rs 1.40 lakh crore . The power companies are seeking Supreme Court intervention in setting aside or quashing an RBI order of February 12 last year where the apex bank laid down strict norms for NPA resolutions within 180-days among other rules.
"75 companies have a debt of Rs 2.24 lakh crore", the petitioners stated. The RBI has already contested the claims of these corporates's petitions saying 180 days is a reasonable period for achieving implementation of Resolution plan.
Power, shipping and sugar companies have challenged the Reserve Bank of India's (RBI) February 12 circular which has identified about 30 companies, which have loans over Rs 2,000 crore and are stressed. Many of them were power companies and they have already challenged the RBI's circular in various courts.
Earlier this month RBI defended the February 12 circular, telling the SC that intention behind the circular was to give banks more powers in resolving stress and the 1-day default rule is to ensure banks & borrowers put a risk management framework in place. SC has reserved its verdict.
The 1-day default rule of RBI states if a deafulter fails to pay even 1 day after the deadline of loan payment, then banks have to come up with a resolution plans and, if they don't, approve the resoluion plan within 180-days, then the banks will have to take the company to insolvency. This rule was mostly criticised by companies.
The prominent corporates where payments are due are Adani Power Maharashtra (Rs 9,463.29 crore), Damodar Valley Corpora (Rs 9,756.42 crore), Jaiprakash Power Ventures (Rs 8,719.16 crore), KSK Mahanadi Power Company (Rs 14,165.12 crore), Jindal Thermal Power (Rs 5,594.21 crore), Prayagraj Power Generation (Rs 9,883.28 crore), Jaiprakash Power Ventures (Rs 8,719.16 crore), GNR Chhatishgarh Energy (Rs 5,325.28 crore) and DB Power (Rs 5,930.56 crore) among a host of others.
Among the consolidated NPA list of other corporates VOVL, an oil company having a 17-bank consortium of lenders owes Rs 21,657.54 crore to them. Matrix Fertiliser and Chemicals owes 11 bankers Rs 4135.12 crore. Essar Bulk Terminal, an infra company owes Rs 1,088.82 crore and Rolta India has a debt of Rs 3,400 crore.
The new framework of RBI prescribed a strict 180-day timeline over which banks are required to unanimously agree on the resolution plan, failing which the stressed account would have to be referred for resolution under the Insolvency and Bankruptcy Code (IBC).
Power companies argued that the circular would push even power assets that were close to achieving loan restructuring in to insolvency.
Power ministry officials also spoke out against the February 12 circular seeking some relaxation in norms, especially with respect to the one-day default rule, attributing the stress in the sector to delayed payments by electricity distribution companies of India (discoms), lack of power purchase agreements and irregular coal supply.
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S KINGSLEY MARTIN
4 months agoEven after these loans, the economy is not doing well! So we've a long road to recovery!!
Bhuvaneswaran K
4 months ago11 Thousand Crore out of 2.46 Lakh crore is big amount, yes... One party has promised 72 Thousand crore... which will definitely not come back! We are doomed! ROFL! :-(
Ramesh Poapt
4 months agofuture NPA 20000+cr ?
GLN Prasad
In Reply to Ramesh Poapt 4 months agoMaybe in future a political party may try to offer a loan waiver scheme exclusively for these borrowers.
v subramanian
4 months agoSucheta Dalal taunted that the government goes after small fries when big industrialists and businessmen fly away. Now this article on directed lending. Media will bash the government either way.
Sucheta Dalal
In Reply to v subramanian 4 months agoThe sheer numbers don't worry you? I wonder why Indira Gandhi's loan melas were criticised in the 1970s? That too by the BJP/ Janata which used to be the main opposition.
GLN Prasad
4 months agoThis is not new in the Banking sector. First, it was Gramodaya, then bottled as PMRY and now in new brand PMMY, and it is known to all bankers that in the very first year itself they treat it as NPA and loss assets, and no auditor/inspecting official even care to go through end use of funds. Some enlightened public and parties question on Banks' role with Mallaya or Nirab as though it is a license that because the bank has not acted on them, banks should not proceed against these PMMY beneficiaries though recovery can be done using Revenue process or filing a police complaint about misuse/abuse. Fortunately, there is AADHAR linking and rating now which gives a scope to avoid such borrower in the future. Bank as a whole has to consolidate and provide a statement zone wise/state wise on the grounding of these schemes and it is far from the truth to say that no data is available. If no data is available, RBI may not come to know of the impending dangers. They are also not serious and because they have to make a comment on paper it was reduced in writing without any seriousness on personal accountability. Because the Government is earnest in promoting entrepreneurship, this is is not a free license for delivery of credit without any responsibility by bankers.
V ganesan
4 months agocomparing with corporate npa this npa is miniscule in nature.This mudra loan is driving growth engine.For every thing to blame psb is not fair.
SANDESH PAWAR
4 months agoI think Mr. Modi wanted to please Small nd micro companies after the demobilisation and GST application they were not happy.
Pure politics, as always PSB’s had to take the blunt.
K V RAO
4 months agoMudra scheme was totally unnecessary when all the PSBs had their own schemes for financing small scale industries and small business units. But the main issue is banks inability to identify the needy borrowers. They just achieve the targets. This is where we need to redefine the role of finance ministry. It should not get into bank loan policy issues. It should leave such aspects to RBI. But alas, even RBI is a helpless and spineless spectator.
Further one may be surprised to know even after massive disbursements, a huge numbers of small industries/business have been left out. That is the paradoxical situation. Most of the issues pertain to seriousness in implementing such schemes. Bank soldiers have not been doing their jobs efficiently.
SuchindranathAiyerS
4 months agoLakhs of Crores doled out for wannabe chai wallas, pakora wallas and paan wallas. Like Indira-Sanjay SEEUY (Poojari Loans). My savings will evaporate in Modi-Jaitley inflation
BV SUDHANVA
4 months agobad debts of Rs. 11000 crores is for what period? since the beginning of the scheme or for the fy 2018-19?. And if we take the total sanction amount of Rs 245000 crores the npa amounts to 4.5%.