Shares of power sector rose on Tuesday after Supreme Court struck down RBI's February 12, 2018 circular on bankruptcy proceedings, calling it 'unconstitutional'.
At 12:30 pm, Power Finance Corporation was quoting at Rs. 122.30 almost 2.26 per cent up. Shares of Rattan India Power lead the power sector and rallied 18 per cent up to Rs. 3.20, with Ratan Infra at 13 per cent jump, KSK Energy rose up to 4 per cent at Rs. 0.91 and Tata Power up 1.08 per cent at Rs. 75 intra-day.
At 12:05 pm IST, other electric utilities industry stocks were also green such as Adani Power quoting 3.19 per cent up at Rs. 50.10, NTPC at Rs. 135.55 with 0.41 per cent increase, Power Grid at 1.64 per cent increase to Rs. 198.80 and JSW Energy shares gained 2.99 per cent at Rs. 7.90.
The RBI, through this February 12 circular last year, had directed the banks to declare a borrowing company a defaulter if a resolution plan was not arrived at within a period of 180 days. This resolution plan was to be formulated by all the lenders of the company.
This impacts the affected industries as they would be dragged to National Company Law Tribunal (NCLT) under the Insolvency and Bankruptcy Code by the Banks if a resolution plan was not formulated within 180 days.
Power companies had challenged the circular in the Supreme Court saying they could not be treated in the manner similar to other sectors since they were heavily regulated and faces stress due to unavoidable factors such as non-availability of fuel or cancellation of coal blocks.
(Edited by Rupa Burman Roy)