With reference to ‘New ARC may take a load of power NPAs’ (September 6), the scheme covers projects which are completed but do not have PPA or fuel supply arrangements and which are yet to be completed. The proposed ARC will hold these assets with no solution in sight on the variety of problems faced, but only on the hope that the demand for power will pick up thanks to the ‘total electrification’ push by the Centre. It is not clear who will fund the management costs of the stressed assets by NTPC, the costs of coal supply support by the Centre or the costs involved in getting clearances and completion of the incomplete ones. The GENCOs and DISCOMs of various state governments bailed out in 2015 are not yet out of the woods. In this scenario, possibility of any revision in PPA with the increase to be passed on to the GENCOs (for revival of power companies concerned) appears remote.
The proposal contains the same features of any other ARC but with no powers on liquidation as the assets are to be held for a period of five years or till the ‘demand’ position improves whichever is earlier. Upfront 15 per cent cash payment to be effected by the ARC might well be ‘cash neutral’ as the same money might as well come back from the lenders in the form of ‘capital’ to meet the capital requirements of new ARC.
By carrying the stressed assets in the NPA books as ‘Warehouse Receipt’, the lenders need to make provisions only to the extent as per RBI norms on NPAs. Whether rescuing the lenders from immediate huge provision requirements is the aim? No one knows.
V Viswanathan
Coimbatore
The move to float ‘Pariwartan’ as an ARC to tackle bad loans in the power sector is an innovative idea. The NCLT alone cannot be a solution to resolve the NPA issue, since the underlying assets in the power sector either do not match the liabilities or there are no interested buyers. Though banks will not get any immediate relief by transferring the NPAs to Pariwartan, it starts the process for attracting bidders for the stressed assets.
The roping in of NTPC as a facilitator to rehabilitate the assets will accelerate the process of rehabilitation. Banks have fully provided for these NPAs and once the units are rehabilitated and interested buyers take over the units, the cash inflows will directly flow to enhance the bottom line of the banks. It is a prudent initiative, as knocking the doors of NCLT when there are no saleable underlying assets will only result in a stalemate. A combination of Pariwartan and NCLT proceedings will give the desired results.
S Veerarghavan
Madurai
The positives of DeMo
While nobody can claim that the demonetisation of higher denomination currency notes in November 2016 by the present government was entirely good and smooth sailing, one can also not condemn it outright. Of course it is true that people from all walks of life were all made to stand in long queues for hours to draw their own money from bank ATMs.
One silver lining is the increase in number of people who have filed I-T returns, which has gone up by a whopping 70 per cent. This is only due to stricter laws and demonetisation.
One must not forget that the moment an individual has deposited his old currency notes of high denomination all his details are captured by the bank/government. If and when the government decides it can call for explanation from these individuals. This is the success of the much criticised scheme. The positive results of this will be seen in due course.
K Ashok Kumar
Kolkata
Flood relief wrangle
With reference to ‘Diplomatic bungling over flood relief’, India was well within its right to decline UAE's financial aid, as we are capable of generating the necessary resources. And UAE did so not only because of the fact 6 millions Indians live there but because India has extended it's friendly hand to them when ever they needed.
But the writer is right in saying that we should have handled this more sensitively given our deep ties with the UAE. It was a well meaning gesture and if needed to be turned down then it should have been done with utmost care with personal communication from none other than Prime Minister himself.
Bal Govind
Noida
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