‘Govt. opposed RBI in court for first time’: Jairam

The Congress on Monday alleged that the Centre, for the first time ever, has opposed a circular of the Reserve Bank of India (RBI) in a court of law, to protect the Gujarat State Petroleum Corporation (GSPC) from being declared bankrupt under the new Insolvency and Bankruptcy Code law.

“This is the first time in independent India, in 70 years, that the Government of India challenges a circular of the Reserve Bank in a court. There are always differences between the government and the RBI, but it never [reached] a court of law,” senior Congress leader Jairam Ramesh told reporters at a press briefing.

Circular challenged

On February 12, the RBI had issued a circular stating that any company with over ₹2,000 crore of bank dues should be declared bankrupt if they did not clear them within 180 days. However, this RBI circular has been challenged by a number of private power companies in the Allahabad High Court, arguing that the 180-day period is too short.

On August 2, the Centre too filed an affidavit in the High Court stating that it did not agree with the order.

This move by the Centre, the Congress alleged, was aimed at protecting the GSPC that owes ₹12,519 crore to a consortia of public sectors banks, with the State bank of India (SBI) as the lead lending bank.

“I am making this statement with a full sense of responsibility that these power producers were encouraged by the Government of India to go to the Allahabad High Court to challenge this RBI circular,” Mr. Ramesh said.

He said that as per the RBI circular, the SBI as the lead bank, should initiate action to get the GSPC declared bankrupt under the Insolvency and Bankruptcy Code law.

“This demonstrates the [Modi] government’s approach to institutions and if the RBI circular is not implemented, it will be performing the antim sansksar (last rites) and RBI would have lost all autonomy and credibility,” he said.

“All efforts are being made to ensure that GSPC is not declared bankrupt because if it is done, then it will be a blemish on Prime Minister Modi’s record.”