NEW DELHI: The government will work closely with the Reserve Bank of India (RBI) to resolve expeditiously the problem of certain loans not getting repaid to banks, resulting in their bad performance, Finance Minister Arun Jaitley said here on Friday. The NPA ordinance will provide “adequate comfort for bankers to take appropriate business decisions….” he noted.
President Pranab Mukherjee gave assent to promulgation of the Banking Regulation (Amendment)
Ordinance, 2017 on Thursday night and the same has been notified on Friday. Now, the Government of India can authorise RBI to initiate insolvency and liquidity proceeding against any stressed assets, he said.
RBI has also been empowered to issue other directions for resolution, and appoint or approve for appointment, authorities or committees to advise banks for stressed asset resolution. RBI will be empowered to intervene in specific cases of resolution of non-performing assets, to bring them to a conclusion.
Jaitley also highlighted that the recent enactment of Insolvency and Bankruptcy Code, 2016 has opened up new possibilities for a time-bound resolution of NPAs.
The Sarfaesi and Debt Recovery Acts have been amended to facilitate recoveries. A comprehensive approach is being adopted for effective implementation of various schemes for timely resolution of bad loans, he said.
Jaitley explained that when MoUs are signed with public-sector banks that seek recapitalisation, there will specific provisions in the MoU relating to immediate cash release initiatives such as sale of assets, closure of non-profitable branches, reduction of overhead and business turnaround initiatives will be part of resolution process.
Ordinance gets president’s nod
President Pranab Mukherjee gave his assent to promulgation of the Banking Regulation (Amendment) Ordinance, 2017 on Thursday night and the same was notified on Friday. Now, the government can authorise RBI to initiate proceedings against any NPA