NEW DELHI: The Committee on Subordinate Legislation has asked Reserve Bank of India Governor Shaktikanta Das and heads of public sector banks to appear before the parliamentary panel on May 7 to explain the impact of the recent Supreme Court order on Non-Performing Assets (NPAs).
Earlier this month, the Supreme Court had quashed the RBI’s February 12, 2018 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 (NCLT).
The Supreme Court judgment upheld the constitutional validity of Section 35AA of the Banking Regulation Act, which empowers the Central government to act — either directly or by directing RBI to take action — against defaulters. And the government had said it would first wait for the RBI’s response to the decision.
While the RBI has already said it would come up with a fresh circular, the lack of clarity has created much confusion among the industry, banks and various stakeholders; several resolution processes are stuck over the issue.“The committee wants to know what is going to be the impact (of SC order) on the state of NPAs. There is so much confusion over it. So, it (the committee) has asked all stakeholders to be present on May 7 to discuss and explain the wider implications of this order,” an official told this publication.
Apart from Das, the meeting is likely to be attended by the heads of public sector banks and secretaries of the Department of Financial Services and Ministry of Corporate Affairs. Last year too, the panel, headed by senior Congress leader T Subbarami Reddy had met the then RBI governor Urjit Patel, top public sector bankers and government officials to discuss the mounting bad loans and ways to resolve the problem.
Several bankers had then apprised the Committee on Subordinate Legislation of Rajya Sabha about different aspects of the NPA issue; that classification of ‘one-day’ default as an NPA was too harsh and that it should be made more practical.Top officials of about 16 PSBs had attended the meeting last year and held discussions for over three hours.