13.06.2018

The Indian dailies have observed that the power sector should not get any concessions under the Insolvency and Bankruptcy Code (IBC) as the sector’s assets are stressed. All the papers have commented on the positive outcome of the Singapore Summit between President Trump and North Korean leader Kim Jong-un.

FINANCIAL EXPRESS in an editorial POWER LOANS NOT SPECIAL writes, following the Allahabad High Court order on June 1st, the Finance Ministry must meet with all stakeholders to come up with a solution for stressed power assets in a month’s time. However, unless RBI decides to provide lenders with forbearance, the only way these units can be salvaged is, that they are bought over by power producers. It is not clear whether the finance ministry will request the central bank for forbearance. Even if it does, RBI should not agree to provide any. Banks are vulnerable to big haircuts on their approximate exposure of Rs. 1.8 lakh crore to these stressed assets. The central bank earlier, had directed banks to classify as “stressed” any account on which a borrower had defaulted, even for a day. Lenders were then required to come up with a resolution plan (RP) for aggregate exposures of Rs. 2,000 crore or more within 180 days of the default, failing which they had to initiate insolvency proceedings under the Insolvency and Bankruptcy Code (IBC) within 15 days. The interim Finance Minister, Piyush Goyal, has rightly said that the insolvency process under the IBC should not be interfered with. If RBI allows lenders forbearance for the power sector, it will set a precedent and prompt others to ask for similar benefits. The fact is that lenders have initiated insolvency proceedings against very large companies, and power units cannot be given differential treatment.

THE HINDU in a piece HISTORIC HANDSHAKE says the summit between U.S. President Donald Trump and North Korean leader Kim Jong-un in Singapore is an affirmation of the power of diplomacy. Until a few months ago, the two countries had been trading nuclear threats, as the North raced along with its nuclear weapons programme. Both Mr. Trump and Mr. Kim were keen on casting the “comprehensive” meet in a positive light. In the brief joint statement after their meeting, Mr. Kim iterated his “firm and unwavering commitment to complete denuclearisation” of the Korean Peninsula, while Mr. Trump offered security guarantees to the North. Mr. Kim had earlier promised to denuclearise the peninsula in return for security assurances, while Mr. Trump had promised that the North would be welcomed into the international community as a respectable member and be allowed to prosper economically. The two leaders have put these demands and promises into a document that could guide future diplomatic engagement.

THE INDIAN EXPRESS commenting on same topic observes, US President Donald Trump and North Korean leader Kim Jong-un expressed their willingness to take huge political risks. Their readiness to gamble on the first ever summit meeting between the two nations locked in mutual hostility for many decades has been breathtaking. Those looking for a detailed declaration after the talks between Trump and Kim were disappointed; but the short statement they issued has huge potential to reorder the geopolitics of the Korean Peninsula. Trump, who began with the idea of “maximum pressure” has moved to a very different framework built around two ideas — building personal trust and thinking political. On the first, Trump was ready to travel a long way from America to Singapore and sit down with Kim without any preconditions. After the talks, Trump expressed his full confidence that the North Korean leader is a partner he could work with. On the second, Trump was willing to go much further than his predecessors in offering security guarantees to North Korea. Trump explained what was left unsaid in the statement. That he would scale down the routine but aggressive US military exercises in the Peninsula. Trump also said he would be happy to consider bringing back home 32,000 US troops in South Korea at a future date as part of constructing a peace regime.