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Govt notifies changes to Banking Act

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The government on Friday notified changes to the Banking Regulation Act, giving the RBI broad powers to deal with specific bad-loan cases as it tries to speed up resolution of Rs 9.64 trillion of stressed assets clogging the Indian banking system.Experts cautioned that this was just the first step in the process of putting the onus on the central bank to reduce the mountain of bad loans.The move could pose potential conflict-of-interest issues for the regulator,they said. The ordinance, which was approved by the President late on Thursday, also gives the government powers to authorise RBI to invoke the insolvency and Bankruptcy Code against defaulters. Separately, it also empowered the central banks on its own to settle bad loans with defaulters, and to form oversight commitees deal with the issue. The new rules are applicable with immediate effect and the centre has already issue a "general instruction" to RBI to take action, finance minister Arun Jaitley said.

Business Standard New Delhi, 06th May 2017

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