NEW DELHI: The country’s public sector banks (PSB) feel that the Central government should take strict action against promoters if the forensic audit finds them guilty, PSB heads apprised the Committee on Subordinate Legislation on Tuesday.
The panel had asked Reserve Bank of India (RBI) Governor Shaktikanta Das and heads of public sector banks to appear before it on Wednesday, to explain the impact of a recent Supreme Court order quashing RBI’s February 12, 2018 circular on classification of Non-Performing Assets (NPA).
According to sources, while the RBI Governor was represented by his deputy, the meeting saw the presence of heads of PSBs, secretaries of Department of Financial Services and Ministry of Corporate Affairs.
“The bankers discussed various ways to reduce NPAs. They also wanted some clarity on the revised February 12 circular from RBI. The RBI has assured that it will come up with the revised February 12 circular soon and that the new circular will address other concerns of the bankers,” a source, who attended the meeting, told TNIE.
The parliamentary committee also took views from bankers on problems they faced in managing NPAs, sources said. The panel discussed changes required in the Insolvency and Bankruptcy Code to fast-track resolution process.
Last month, the Supreme Court had quashed the RBI’s February 12 circular, which mandated banks to classify as NPAs even one day default on loans worth above `2,000 crore; if a resolution is not reached within 180 days, the defaulters are to be referred to the National Company Law Tribunal.
The RBI has already said it would come up with a fresh circular; the lack of clarity meanwhile has created much confusion among the industry, banks and various stakeholders. Several resolution processes are stuck over the issue.
The committee wanted to know what is going to be the impact of the Supreme Court order on the state of NPAs and wanted all the stakeholders to discuss and explain the wider implications of this order and also the roadmap ahead.
RBI flags issues related to states’ finance
Mumbai: Reserve Bank of India in its meeting with the 15th Finance Commission made a presentation on ‘State Government Finances for 2019-20’, flagging issues on factors driving fiscal slippages and outstanding debt, and separately raised issues and challenges of the market borrowings of state governments, a PIB release said. Among the key issues RBI Governor Shaktikanta Das raised with the Finance Commission team headed by Chairman N K Singh was specific factors driving fiscal slippages — UDAY, the revival package for electricity distribution in the past and the farm loan waivers and income support schemes in 2018-19 RE (revised estimate). The RBI presentation said the importance of states in the economy has increased with the shift in composition of government finances, and how revised estimates of fiscal deficit of states deviate significantly from the budget estimates, “reflecting poor fiscal marksmanship.”