DNA Money Edit: Waiting for light at the tunnel's end

The meeting of lenders and power companies as well as state undertakings such as Power Finance Corporation (PFC) and Rural Electrification Corporation (REC) on August 17, convened by union power secretary, will need to address the grave issues concerning stressed power plants in the country and come up with some quick solutions.

As Project Sashakt, a new scheme announced by the government primarily aiming at mega infrastructure projects, is yet to take shape, there are concerns. The 180-days deadline set by the Reserve Bank of India (RBI) when it takes fresh set of bad loans under Insolvency and Bankruptcy Code (IBC) of 2016 is soon to expire. Under the new scheme, there are regulatory hurdles to set up a framework for the proposed Asset Management Company (AMC) and Asset Reconstruction Company (ARC). The government may also have to soon capitalise these institutions. What is more, banks will also have to sign inter-creditor agreements for all imminent bad loans.

The fact that 62% of operational thermal capacity in the private sector -- 52 gigawatt (gw) out of 80 gw -- is stressed makes the whole issue so critical. RBI needs to extend the deadline and provide necessary support for the new structure to go on stream without any delay. It is vital for the economic growth that we salvage the commercially operational stressed projects as quickly as possible and help them turn standard again.