Arun Jaitley introduces Banking Regulation (Amendment) Bill in Rajya Sabha
Mumbai: Finance minister Arun Jaitley on Thursday introduced the Banking Regulation (Amendment) Bill, 2017 in Rajya Sabha.
The bill seeks to amend the Banking Regulation Act, 1949 and replace the Banking Regulation (Amendment) Ordinance, 2017, which was promulgated on 4 May.
It gives powers to the Reserve Bank of India (RBI) to ask any bank to initiate insolvency proceedings and give directions for resolution of stressed assets.
“It is already too late... capacity of banks to support growth is impacted,” said Jaitley in the house. He specified that apart from the introduction of insolvency and bankruptcy code, the government has amended the laws for debt recovery tribunal and allowed 100% foreign direct investment (FDI) in asset reconstruction companies.
Steel, infrastructure and power are among the sectors where the bulk of an estimated Rs10 trillion of stressed assets have piled up, choking the banking system.
In June, central bank internal advisory committee identified 12 large stressed cases, accounting for a quarter of India’s total gross non-performing assets (NPAs), for proceedings under the insolvency and bankruptcy code.
Subsequently, the central bank advised banks to set aside 50% provisioning against secured exposure and 100% against unsecured exposure in all cases referred for bankruptcy.