The measure allows the RBI to initiate insolvency resolution process on specific stressed assets.
The RBI would also be empowered to issue other directions for resolution, appoint or approve for appointment, authorities or committees to advise the banking companies for stressed asset resolution.
Jaitley introduced the Bill amid protests in the House by opposition members protesting over the alleged incidents of lynching by cow vigilantes in different parts of the country.
Non-performing assets of banks have risen to over Rs 9 lakh crore and now RBI is being given power to refer the cases to Insolvency and Bankruptcy Board, he said.
"It is the same RBI which had not been able to count notes (since demonetisation). Giving such powers to RBI will detract it from macro-economic to micro-economic issues and render the bank management useless," Roy said
He demanded that the bill be referred to the Parliamentary Standing Committee.
When Speaker Sumitra Mahajan asked Jaitley if he has to say anything on Roy's remarks, the Finance Minister said the issues does not relate to the introduction and would be dealt with when the bill comes up for a discussion.
Moving on fast-track, the RBI had in June identified 12 large loan defaulters who account for 25 per cent of the total bad loans in the banking sector.
Action under the Insolvency and Bankruptcy Code has already begun in certain cases, including Essar Steel, Bhushan Steel and Bhushan Power & Steel.