The industry and banking sector on Friday hailed the steps taken by the government and Reserve Bank of India to address the issue of rising non-performing assets (NPA).
"Amendments to the Banking Regulations Act, coming on the heels of the enactment of the Insolvency and Bankruptcy Code and amendments to the SARFAESI and Debt Recovery Tribunal Acts indicate the government's firm commitment to find a satisfactory solution to the NPA resolution problem," said Arundhati Bhattacharya, Chairman, SBI.
"Empowering the RBI with an explicit mandate should reorient various stakeholders for effective NPA resolution. The country and its banking system needs to move quickly and decisively to take benefits of these enabling provisions," she added.
An ordinance empowering the Reserve Bank of India (RBI) to tackle bad loans of banks got the Presidential nod.
The ordinance, signed by President Pranab Mukherjee on Friday, has a provision under which the central government may authorise the Reserve Bank of India to issue directions to any banking company to initiate insolvency in respect of a default under the provision of the Insolvency and Bankruptcy Code, 2016.
It also has provisions to empowering the RBI to issue directions to banking companies for resolution of stressed assets.
The RBI may specify one or more authorities or committees to which it will appoint members to advice banks on resolution of stressed assets.
The Banking Regulation (Amendment) Ordinance, 2017 passed by the Cabinet and promulgated by the office of President of India is a major step forward towards resolving the NPA menace in a time bound manner, industry chamber Federation of Indian Chamber of Commerce and Industry (FICCI) said.
"FICCI is fully supportive of the efforts of the government and has always maintained that in all cases where there is a clear indication of wilful default or malfeasance, the law of the land should prevail and firm action should be taken," said A. Didar Singh, Secretary General, FICCI.