APP seeks relaxation of RBI’s stressed asset guidelines

The Association of Power Producers (APP) has written to the Reserve Bank of India (RBI) requesting a relaxation of the recent guidelines (released in February 2018) regarding stressed assets. As per the guidelines, even a one-day default in debt servicing for accounts with exposures of over Rs 20 billion would warrant the formulation and implementation of a resolution plan. If this failed, within three months, the cases would have to go to the National Company Law Tribunal. As per the APP, the new guidelines disincentivise loan restructuring in the power sector and seek the sale and change of control of assets of stressed developers.