Lenders have decided to file an affidavit in the National Company Law Tribunal (NCLT) to continue insolvency proceedings against stressed power projects that were referred to the bankruptcy court on the basis of the February 12 circular of the Reserve Bank of India (RBI).

The RBI circular has been declared ultra vires by the Supreme Court. This has also put a question mark on several cases of stressed assets that were referred to the NCLT by the lenders as all earlier proceedings become infructuous.

"We are filing an affidavit in the NCLT not to stall insolvency proceedings against eight stressed power projects that were referred to the appellate body post the RBI circular. The power projects remain in stress and lenders believe that there is no point to start resolution of these all over again," said a top official of a power sector lending institution who did not wish to be named.

Lenders, however, said that they would also wait for the issue of a new circular from the RBI to start resolution of other stressed assets. The resolution of assets has almost stalled after the Supreme Court order as none of the bankers wants to take risk of approving a resolution now for the fear of future vigilance action.

The Supreme Court's April 2 order raised question marks over the fate of about 8 power projects including the 3,600 MW KSK Mahanadi Power Co. Ltd, the 1,920 MW Lanco Amarkantak Power Ltd, the 600 MW Avantha Power (Jhabua), the 1,350 MW Rattan India Power Ltd (Nasik), the 550 MW RKM Powergen, and the 700 MW Bharat Utkal.

These projects were referred by a consortium of lenders including the Power Finance Corporation to the NCLT as per the provisions of the February 12 RBI circular, which said that it would be mandatory for projects in default to be referred to the NCLT after 180 days from the start of the resolution period. As 180 days for these projects ended in August, they were referred to the NCLT.

Sources said that banks are expected to take recourse to an affidavit also in case of few other stressed assets in sugar and shipping sectors that also got referred to the NCLT and now face uncertainties.

In all about 70 cases with total bank exposure of about Rs 4 lakh crore were declared as stressful by the banks post RBI circular. This included 34 stressed power projects worth 40,000 MW having total bank loans of close to Rs 1.8 lakh crore. It is not that institutions, including the PFC, did not try to resolve certain power projects, but none of the attempts were successful.

In the case of KSK Mahanadi, Adani Group showed interest but it soon withdrew from the race as lenders were divided on the level of the haircut. In the case of Rs 600 crore one-time settlement scheme worked out for Lanco Amravati, the sole investor backed out from the race at the last minute.

With relation to Avantha Power (Jhabua), an Rs 100 crore settlement for the PFC got stalled after one of the operational creditors took the asset to the NCLT.

In the case of Prayagraj, the resolution has got delayed as the UP power regulator has asked the project to reduce the tariff by 11 paisa. This may change the bid value.