The measure allows the RBI to initiate insolvency resolution process on specific stressed assets
Replacing an ordinance, the Parliament on Thursday passed the Banking Regulation (Amendment) Bill, 2017 empowering the RBI to seek recovery of mounting Non-Performing Assets (NPAs).
The measure allows the RBI to initiate insolvency resolution process on specific stressed assets.
The Rajya Sabha passed the bill introduced by finance minister Arun Jaitley with a voice vote. The Lok Sabha had passed it last week.
Responding to the discussion on the bill, Jaitley said that Non-Performing Assets (NPAs) in the public sector banks alone account for about Rs 6.41 lakh crore at end-March.
"It is true that the NPA figure is rising...It has nothing to do with my tenure except that after I took over, the interest (on loans) keeps rising. The interest did not stop on that day. These are all old loans," he said, replying to the opposition's criticism.
On the issue of wilful defaulters, Jaitley said there is no prohibition on either publishing their names or photographs.
"In fact all the wilful defaulters' names and photographs are published through advertisements," he said adding that normal commercial details are never published.
On queries why the government itself was not taking action on NPAs, instead of giving the mandate to the RBI, Jaitley said the RBI is not merely a regulator in India. "If it were, you probably had a valid point."
The RBI would also be empowered to issue other directions for resolution, appoint or approve for appointment, authorities or committees to advise the banking companies for stressed asset resolution.
Explaining the urgency to bring the new law, Jaitley said it was "already too late" as the capacity of the banks to lend to small creditors is being impacted which is affecting the growth.
Due to this legislation, Jaitley said the banks will soon start "realising the money, assets will not be wasted, the companies will continue to function and the jobs that are there in the company will also be saved".
Jaitley also gave a detailed account of various sectors like steel, power, infrastructure and textiles, which have most NPAs.
Earlier, participating in the debate on the bill, Naresh Aggarwal of SP criticised the government for not acting swiftly against the people named in Panama paper and those who have been wilful bank defaulters.
Tapen Kumar Sen (CPM) suggested that RBI should be taken out of the picture and banks should be empowered to invoke insolvency proceedings against defaulters. He said that banks should be made directly responsible for dealing with the issue of NPAs and name of 50 defaulters which constitute 80 percent of NPAs should be made public.
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