Banking regulation act to expedite resolution of bad debts: Jaitley

The increasing non performing assets among banks is one of the biggest factors hampering the growth of banking sector.

In a bid to tackle the bad loans problem which has clogged the banking system, the Union Government on Friday notified the Banking Regulations Amendment Ordinance.

The ordinance empowers the Reserve Bank of India (RBI) and banks to initiate bankruptcy proceedings against chronic defaulters.

Union Finance Minister Arun Jaitley said the Centre is committed to 'expeditious resolution of stressed assets' which has hampered the growth of banking sector.

"Recent enactment of Insolvency and Bankruptcy Code, 2016 has opened up new possibilities for time bound resolution of stressed assets," Jaitley told media persons.

The ordinance authorises RBI to issue directions to banks for resolution of stressed assets. The central bank can also form committees to advise the banks on tackling bad debt problems.

It has also made it easier for banks to invoke the insolvency and bankruptcy code which will help them reduce the time for resolving a default cases.

The Union Cabinet had earlier approved an amendment and sent an ordinance to President Pranab Mukherjee for his approval. President Mukherjee on Friday approved the ordinance to amend the Banking Regulation Act 1949.

The increasing non performing assets among banks is one of the biggest factors hampering the growth of banking sector. The government had earlier said that banks' stressed assets are 'unacceptably' high and called for urgent steps to resolve the problem.

According to reports, total NPAs at the end of December 31, 2016, was estimated to have crossed Rs 7 lakh crore.

OneIndia News