President Pranab Mukherjee last night signed ordinance to amend Banking Regulation Act.
New Delhi: Reserve Bank has been given powers to identify specific loans gone bad and enforce quicker resolution with the government amending the banking law through an executive order, Finance Minister Arun Jaitley said today.
President Pranab Mukherjee last night signed the ordinance to amend the Banking Regulation Act, giving RBI powers to direct banks to initiate insolvency and bankruptcy in case of default, he told reporters here.
He said a list of some of the stressed assets is already with the RBI and it is looking into it. "Present status quo cannot continue. And the present status quo is that not much was moving," he said.
On the need for an ordinance, he said RBI required to be empowered in relation to specific stressed assets. Sale of assets, closure of non-profitable branches, reduction of overhead and business turnaround initiatives will be part of resolution process, he said.
Non-performing assets or NPAs of banks have risen to about 17 per cent of total loans, the highest level among major economies. They are about 8.4 per cent of the GDP, according to Credit Suisse.