In a setback for independent power producers association of India (IPPAI), Allahabad High Court on Wednesday (July 18) refused to stay the implementation of controversial February 12 circular by Reserve Bank of India (RBI) in the power sector, sources privy to the developments told CNBC-TV18.

The circular requires banks to finalise a resolution plan in case of a default on large accounts of Rs 2,000 crore and above within 180 days, failing which insolvency proceedings will have to be invoked against the defaulter.

The court ordered government to file a report on stressed assets in power sector in two weeks’ time after latter failed to submit the report.

Fixing the next hearing on August 2, the court said it will take a final view after seeing the government report.

On May 31, the court had stayed the RBI's circular for a month and asked the finance ministry to call all related parties to resolve the situation of stress in power companies due to high debt, no power purchase agreements and lack of coal.

The court's ruling, though applicable to only the petitioners under the banner of Independent IPPAI.

First Published:Jul 18, 2018 1:18 PM IST