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Trigger in Banking Regulation

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Trigger in Banking Regulation
RBI and public sector bank’s failure triggers the Banking Regulation Amendment Bill
Common consumers, farmers, small traders and educated unemployed youths need credit facilities and banks are expected to provide them as per the Union and State Government schemes and policy. But while corporate giants who have tremendous influence on the banking sector are getting ample credit facilities and concessions in recovery of dues, the very principle of equity is crushed.
Both the RBI and banks failed to maintain the balance with the result that they are almost compelled by the new Amendment to recover the dues by way of liquidation of the assets of the big and willful defaulters.While the Amendment in the Banking Regulation Act that went through Parliament in Monsoon Session, the ordinance was issued first on 4th May when the Parliament was not in session.
The said ordinance and now the bill while stressing the need for the amendment points out that the stressed assets in the banking system, or non-performing assets have reached unacceptably high levels and hence, urgent measures are required for their speedy resolution to improve the financial health of banking companies for proper economic growth of the country.
Therefore, it was considered necessary to make provisions in the Banking Regulation Act, 1949 for authorizing the Reserve Bank of India to issue directions to any banking company or banking companies to effectively use the provisions of the Insolvency and Bankruptcy Code, 2016 for timely resolution of stressed assets.
It was accordingly decided to make amendments to the Banking Regulation Act, 1949. In order to confer power upon the Central Government for authorizing the Reserve Bank to issue directions to any banking company or banking companies to initiate insolvency resolution process in respect of a default, under the provisions
The Economic Times, New Delhi, 23th November 2017

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