Banking

RBI to introduce banking ordinance framework within a fortnight

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In a bid to expedite the recovery of bad loans, the Reserve Bank of India (RBI) is likely to introduce the guidelines to operationalise non-performing assets (NPA) within a fortnight.

The guidelines would be announced to accelerate the recovery of bad loans that have crossed Rs 8 trillion, reported the LiveMint.

The central bank is also likely to launch a special cell that will identify cases for revival or takeover by another company.

In addition to this the bank has also identified about 50 cases for NPA resolution. The apex body was empowered by the government to ask the banks to initiate insolvency proceedings.

 “The cases which have already been examined by the Joint Lenders’ Forum (JLF) but have not reached logical conclusion after that… such cases would be taken up by the RBI and the regulator can direct banks for resolution,” a finance ministry official said.

The ordinance designates the RBI to issue directions to any banking company to initiate insolvency resolution process in respect of a default under the provisions of the Insolvency and Bankruptcy Code (IBC), 2016.

 It has also authorised the central to issue directions to banks for resolution of stressed assets.

The ordinance, which amends Section 35A of the Banking Regulation Act 1949, will be presented in Parliament for approval in the upcoming monsoon session. It has inserted Section 35AA and Section 35 AB in the Act.

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