Government

May 04, 2017

Cabinet clears ordinance to amend Banking Regulation Act, empowering RBI to effectively deal with NPAs


RBI

On May 3, the Union Cabinet approved the promulgation of an ordinance to amend the Banking Regulation Act to empower the Reserve Bank of India (RBI) to more effectively deal with the non-performing asset (NPA) crisis facing public-sector banks.

Reportedly, the ordinance will empower the RBI to issue direction to banks to effectively resolve bad loans. The amended law will also empower the RBI to set up oversight panels that will shield bankers from later action by probe agencies looking into loan recasts as a lot of discretion will be involved in the process.

The ordinance has been sent to the president for approval.

According to Finance Minister Arun Jaitley, the Cabinet has taken important decisions with regard to the banking sector. Jaitley said, "There is a convention that when some proposal is referred to the President, then details of it cannot be disclosed till it is approved. As soon as the approval comes, details will be shared."

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