The government is not likely to use its powers to issue directions to the Reserve Bank of India (RBI) to seek relief for stressed power plants, a top finance ministry official said.
“The government is unlikely to issue directions to RBI under Section 7 of RBI Act. The section can be invoked only in exceptional circumstances and the power asset issue is too small to enforce Section 7,” the official said.
Policy makers are not keen on setting a precedent on use of Section 7 on such an issue. The Allahabad High Court had in its ruling earlier this week told the government to consider issuing a directive to RBI against the February 12 circular on how lenders should deal with stressed assets. Read More
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