The RBI's circular led 34 power producers to drag the regulator first to the Allahabad High Court, which asked RBI to offer some respite, but the RBI did not budge and challenged it in the Supreme Court a year ago.
The Supreme Court on April 2 strikes down the Reserve Bank of India's circular on resolution of stressed assets. This resolution plan was to be formulated by all the lenders of the company should the company default in the payment of interest to any one of its lenders.
The finance ministry, through a report issued with its backing, had earlier argued that the "one size fits all" approach was "erroneous".
On a petition filed by around 70 stressed companies from the power, shipping and textiles space, a two-judge benchof the apex court comprising Rohinton Nariman and Vineet Saran had on Tuesday declared the 12 February circular as ultra vires.
Now, the RBI can ask for a review from the SC on whether its circular can still work without the specific clauses that the court disagreed with.
The RBI circular had directed banks unable to agree upon a resolution plan with any defaulter within 180 days to drag the defaulter into a time-bound insolvency process.
GOP Congressman Offers Alternative to the Green New Deal
The Green New Deal calls for a 10-year mobilization that would, by one estimate, cost US taxpayers as much as $93 trillion. I think it's best not to be passive-aggressive.
Ellen Degeneres Calls for Boycott of Brunei over Anti-Gay Sharia Law
Foreign Minister Marise Payne said Australia has raised concerns with the Brunei government over the new penal code . They are particularly upsetting for the country´s small lesbian, gay, bisexual and transgender ( LGBT ) community.
Chipotle is offering free delivery on National Burrito Day
You'll just have to sign up for the Burrito Elito program, which is basically California Tortilla's rewards program. Rubio's The coastal grill is selling $5 burritos this National Burrito Day with the purchase of a drink.
The Supreme Court Tuesday quashed the RBI circular of past year that pertains to the provisions for referring the defaulter to the National Company Law Tribunal (NCLT) even on a one-day overdue. "We will read it and I am sure the RBI will also decide what is to be done with the various aspects contained in the circular", Jaitley had said. The decision caused panic for many companies, in particular those in the power sector. The National Company Law Tribunal (NCLT) would also be involved in insolvency proceedings against the defaulting companies within 15 days of the six-month deadline. The circular had significantly tightened stressed loan recognition and resolution for large borrowers.
Experts have said quashing of the February 12 circular, could lead to delays in the resolution of stressed assets.
The RBI substituted the previous guidelines with a harmonised and simplified generic framework for resolution of stressed assets in view of the enactment of the Insolvency and Bankruptcy Code. However, the resolution process, which was expected to be expedited, may get delayed, Gupta said.
RBI keeps a capital buffer of over Rs 9.4 lakh crore now, which a section in the government feels is too high and thus should be parted with for better productive deployment like funding the cash-starved state-run banks or cash-crunched power distribution companies.
A parliamentary panel last August had said the circular issued by the RBI addressed only financial issues and ignored sectoral challenges.