President Pranab Mukherjee has given his nod to the ordinance dealing with non-performing assets (NPA), the amendment to the Banking Regulation Act.
President Pranab Mukherjee has given his nod to the ordinance dealing with non-performing assets (NPA), the amendment to the Banking Regulation Act.
On Friday, the President signed the ordinance to amend the Banking Regulation Act.
The amendment will empower the Reserve Bank of India (RBI) to effectively resolve bad loans by setting up oversight committees and insulating banks from Central Bureau of Investigation/ Central Vigilance Comission (CBI/ CVC) investigation.
On Thursday, the Cabinet had approved a promulgation of an ordinance to amend the Banking Regulation Act for resolution of the non-performing asset (NPA) crisis.
The amendments to the Act will help in effectively resolving the bad loans issue, Finance Secretary Ashok Lavasa had said.
"It is not possible for me to put down a number on how this (NPAs) will go down, but certainly we feel that these changes will make the system more effective in handling the bad loans," he added.
The Cabinet's decision got a thumbs-up from the market as Bank Nifty rallied 1.85% to close at 22,720.10.
The secretary further said "we should be able to reach resolution in many of the cases" on the back of professionalism in the banking system and participation of promoters themselves.
He is confident that the amendments will allow the RBI and lenders to take effective steps to deal with the toxic assets.
After discussions with stakeholders, the government felt that some changes were necessary in the statute book to take the problem head-on.
Lavasa, however, did not disclose the details of the proposed amendments.
He is of the view that there is enough appetite in the market to buy stressed assets.
"We should not judge the capacity that is there in the market because people do have appetite for investment in the Indian market. India is probably one of the best destinations for investment at this point of time," he asserted.
Lavasa acknowledged that the NPA situation has not worsened in the recent past and there has been a marked improvement in some of the infrastructure sectors like power and road.
(Background on likely impact of Banking Regulation Act from earlier PTI report)
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