May wait for the Model Code of Conduct to be withdrawn.

The Reserve Bank of India may issue the new circular for resolution of stressed assets only after the general elections.

Sources close to the development said that while much of the work on the circular has been completed by the RBI, its issuance could be postponed until the end of the Model Code of Conduct.

“Discussions with stakeholders have been completed, and much of the work by the RBI is done. However, since it will have significant repercussions on the power and infrastructure sector, it could be delayed until the general elections are over,” said two persons familiar with the development, adding that it is expected to be issued towards the end of May or early June.

The Election Commission is likely to be sounded out over the issue before a decision is taken, said another person. Responding to an e-mail query from BusinessLine, the RBI said it is not in a position to comment on the likely issue date of the circular.

The Supreme Court had, on April 2, set aside the February 12, 2018, circular by the RBI on a revised framework for the resolution of stressed assets.

The circular had directed banks to refer an NPA account of more than ₹2,000 crore for insolvency proceedings if a resolution was not found within 180 days. The move was intended to speed up proceedings to ensure that creditors recover their dues on time, but was challenged by stressed power producers.

RBI Governor Shaktikanta Das had, on April 4, said the central bank would take necessary steps, including issuance of a revised circular for expeditious and effective resolution of stressed assets.

In their discussions with the RBI, banks are understood to have suggested that the time period for the filing of the insolvency resolution process should be extended by 30 to 60 days.

Published On : 26-04-2019

Source : The Hindu Businessline