Finance minister Arun Jaitley on Thursday tabled the Banking Regulation (Amendment) Bill, 2017 in Rajya Sabha which seeks to amend the Banking Regulation Act, 1949 and replace the Banking Regulation (Amendment) Ordinance, 2017, which was promulgated on 4 May.
The bill gives powers to the Reserve Bank of India (RBI) to ask any bank to initiate insolvency proceedings and give directions for resolution of stressed assets.
While introducing the bill in house finance minster Arun jaitely said “It is already too late… capacity of banks to support growth is impacted.” He specified that apart from the introduction of insolvency and bankruptcy code, the government has amended the laws for debt recovery tribunal and allowed 100% foreign direct investment (FDI) in asset reconstruction companies.
Non performing assets are high among Steel, infrastructure and power industries which estimated Rs10 trillion.
In June, central bank internal advisory committee identified 12 large stressed cases, accounting for a quarter of India’s total gross non-performing assets (NPAs), for proceedings under the insolvency and bankruptcy code.
Subsequently, the central bank advised banks to set aside 50% provisioning against secured exposure and 100% against unsecured exposure in all cases referred for bankruptcy.
In Rajysabha while pointing out that the bill includes jail as punishment for insolvency the samajwadi party leader Naresh aggarwal said it seems that CBI, ED are leading the country.