Reserve Bank of India Governor Shaktikanta Das on Thursday said the central bank would issue a revised circular on bad loan recognition within the next few days to replace the February 2018 circular struck down by the Supreme Court, PTI reported. On April 2, the top court had declared as ultra vires the notice that directed banks to classify a loan account as stressed if there was even a day of default.

“The revised circular on February 12 on NPA classification will be issued very shortly, in three to four days,” Das told reporters soon after the RBI’s policy meeting. The central bank lowered the repo rate, or the interest rate at which it lends to commercial banks, by 25 basis points to 5.75%, the lowest in nine years.

Das said it took the RBI a lot of time to prepare a revised circular as various legal matters had to be examined. “It involved examining various legal issues, it involved very detailed and wide ranging stakeholder consultations, and internally we had to examine it in detail,” IANS quoted the central bank governor as saying.

The RBI circular from February 2018 asked banks to refer any account with a loan of more than Rs 2,000 crore to bankruptcy court within 180 days of default. The decision caused panic in many companies, in particular those in the power sector. The industry and government tried to push the central bank to relax its regulations, and even approached the Allahabad High Court, which suggested that the government could use Section 7 of the Reserve Bank of India Act to modify the order.

In March, the RBI maintained its stand on all aspects of the revised framework on resolution of stressed assets as per the 2018 order.

Several companies, including power firms such as Essar Power, GMR Energy, KSK Energy, and Rattan India Power, and the Association of Power Producers and Independent Power Producers Association of India had moved the Supreme Court in August, challenging the constitutional validity of the 2018 circular.

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