RBI identifies 12 defaulters; banks to start bankruptcy proceedings

An ordinance was promulgated last month amending the Banking Regulation Act, 1949, to empower the RBI to resolve the thorny issue of non-performing assets (NPAs) or bad loans.

The Reserve Bank of India has identified 12 of the largest loan defaulters and will order lenders to start bankruptcy proceedings against them to clear bad debt plaguing the economy.

Those 12 accounts were identified based on "objective, non-discretionary criterion" outlined by an internal advisory committee, the RBI said, reports Reuters.

This decision came a day after Union Finance Minister Arun Jaitley had reviewed the performance of state-owned banks on Monday.

An ordinance was promulgated last month amending the Banking Regulation Act, 1949, to empower the RBI to resolve the thorny issue of non-performing assets (NPAs) or bad loans. The government has given the RBI greater power to deal with bad loans, including directing banks to initiate an insolvency resolution process in the case of a default under the bankruptcy code

The 12 accounts constituted about 25% of the overall gross non-performing assets, which accounts for over Rs 1.9 lakh crore. Indian banks are sitting on a stressed asset pile of close to Rs 10 lakh crore, of this gross bad loans restructured loans account for Rs 7.7 lakh crore. However, the RBI did not provide details about the loans or the banks holding them.

OneIndia News