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Govt changes banking regulations to authorise RBI for recovery of bad loans

The banking sector is saddled with non-performing assets (NPAs) of over Rs 8 lakh crore

Press Trust of India  |  New Delhi 

Reserve Bank of India, RBI

The has notified the Regulation (Amendment) Act under which it can authorise the to issue directions to banks to initiate insolvency resolution process to recover bad loans.

The sector is saddled with non-performing assets (NPAs) of over Rs 8 lakh crore, of which Rs 6 lakh crore is with public sector banks (PSBs).

Earlier this month, had approved the Act, which replaced an ordinance in this regard.

The in May had promulgated an ordinance authorising the Reserve of (RBI) to issue directions to banks to initiate insolvency resolution process under the Insolvency and Bankruptcy Code, 2016.

Following the ordinance, the had identified 12 accounts each having more than Rs 5,000 crore of outstanding loans and accounting for 25 per cent of total NPAs of banks for immediate referral for resolution under the bankruptcy

The loan defaulters identified by the include, Essar Steel, Bhushan Steel, ABG Shipyard, Electrosteel and Alok Industries.

Under the Regulation (Amendment) Act, 2017, the can issue directions to banks for resolution of stressed assets.

The can specify authorities or committees to advise banks on resolution of stressed assets. The members on the committees will be appointed or approved by the

The bulk of the NPAs are in sectors such as power, steel, road infrastructure and textiles.

First Published: Mon, August 28 2017. 01:12 IST