The Reserve Bank of India (RBI) got the final authorisation of its powers for dealing with serial bad loans and chronic defaulters from the central government.
An ordinance to amend the Banking Regulations Act, cleared by the union cabinet on Thursday, was signed by President Pranab Mukherjee on Friday.
"The present status quo around NPAs cannot continue. Paralysis in decision making is detrimental to the economy,", Finance Minister Arun Jaitley said, supporting the Cabinet's move to empower RBI.
Two new sections under Section 35 of the BR Act have been added by the government through this ordinance. With this, the RBI is now 'authorised' by the government to identify and take action against top loan defaulters.
"GoI has now authorised RBI to initiate already existing steps and measures against defaulters as set out in the Bankruptcy and Insolvency Code, changes to the Sarfaesi and DRT Acts as enacted by the Parliament in 2016," said Jaitley.
"We are not changing the law. We are just giving more powers to RBI to Act," said Jaitley. These incorporations also empower RBI to identify NPAs languishing at committees to resolve bad loans and initiate necessary proceedings.
An oversight committee would be formed by the RBI to identify such bad loans, the finance minister said.
Meanwhile, actions have already been initiated by the government against defaulters. "Already top 50 defaulters are under action from their banks. The RBI will continue to issue circulars to banks from time to time on this," said Anjuly Chib Duggal, secretary, Department of Financial Services.The Reserve Bank of India (RBI) got the final authorisation of its powers for dealing with serial bad loans and chronic defaulters from the central government.
An ordinance to the Banking Regulations Act, cleared by the union cabinet on Thursday, was signed by President Pranab Mukherjee on Friday.
"The present status quo around NPAs cannot continue. Paralysis in decision making is detrimental to the economy,", Finance Minister Arun Jaitley said, supporting the Cabinet's move to empower RBI.
Two new sections under Section 35 of the BR Act have been added by the government through this ordinance. With this, the RBI is now 'authorised' by the government to identify and take action against top loan defaulters.
"GoI has now authorised RBI to initiate already existing steps and measures against defaulters as set out in the Bankruptcy and Insolvency Code, changes to the Sarfaesi and DRT Acts as enacted by the Parliament in 2016," said Jaitley.
"We are not changing the law. We are just giving more powers to RBI to Act," said Jaitley. These incorporations also empower RBI to identify NPAs languishing at committees to resolve bad loans and initiate necessary proceedings.
An oversight committee would be formed by the RBI to identify such bad loans, the finance minister said.
Meanwhile, actions have already been initiated by the government against defaulters. "Already top 50 defaulters are under action from their banks. The RBI will continue to issue circulars to banks from time to time on this," said Anjuly Chib Duggal, secretary, Department of Financial Services.
