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RBI may take up NPAs worth Rs 8 lakh crore for resolution by March 2019

In case of a default, Ordinance has authorises RBI to direct lenders for initiating insolvency resolution

IANS  |  New Delhi 

Reserve Bank of India
Reserve Bank of India

Industry body on Sunday said the Regulation (Amendment) Ordinance has empowered the Reserve of (RBI) to take up "worth about Rs 8 lakh crore" for resolution by March 2019.

According to an study, the move has the potential to bring down the non-performing asset (NPA) levels and "significantly improve" the financial health of

"Somewhat bitter medicine came in the form of the Ordinance promulgated by the President in May," Assocham's Secretary General D.S. Rawat said.

"The government gave wide-ranging legislative powers to the to issue directions to lenders to initiate insolvency proceedings for the recovery of that have reached unacceptably high levels."

In case of a default, the recent Ordinance has authorises to direct lenders for initiating insolvency resolution process under the provisions of the Insolvency and Bankruptcy Code (IBC), 2016.

Further, the law empowers the to set up sector related oversight panels that "will shield bankers" from any action which might be initiated by probe agencies on a later date.

In the past, lenders have been reluctant to resolve NPAs through settlement schemes or to "sell with hair cuts" to asset reconstruction companies for fear of probe agencies.

"With the institution of OC (overseeing committee), the top bankers should get some cushion against the 3Cs (CBI, CAG and CVC), since the key decisions which involve taking losses by the banks, would be taken by an institutional mechanism and not one or few individuals," said Assocham's study titled "NPAs Resolution: Light at the end of tunnel by March 2019".

 

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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