Mumbai: The Bimal Jalan committee is expected to next week submit its report on the appropriate level of reserves to be maintained by the RBI. According to a report by Bank of America Merrill Lynch (BoAML), the panel will identify excess capital of $14 billion to $42 billion, which can be used to address stressed loans in the power sector.
On Tuesday, the Supreme Court quashed a circular from the central bank forcing banks to initiate insolvency proceedings against defaulting companies. This order has paved the way for restructuring of loans to the power sector.
While this is a relief to both lenders and borrowers it does not address the issue. Lenders did not want to start insolvency proceedings as projects were under implementation and would not find takers.
