President Pranab Mukherjee today approved an ordinance empowering the Reserve Bank of India (RBI) to tackle bad loans of banks. President Pranab Mukherjee signed the ordinance that will amend the Banking Regulation Act tackle the burgeoning non-performing assets on non-performing Assets (NPA) which will provide greater powers to Reserve Bank of India to tackle mounting bad loans. On Wednesday promulgation of the ordinance approved by Cabinet to amend the Banking Regulation Act for resolution of the non-performing asset (NPA) crisis. The government is likely to announce details of the ordinance shortly. The ordinance was sent to the President after it was cleared by the Union Cabinet on Wednesday. Minister of State for Finance Santosh Kumar Gangwar said, “This ordinance will enhance the power of RBI to manage bad loans”.
Finance Secretary Ashok Lavasa said the amendments to the Act will help in effectively resolving the bad loans problem, “It is not possible for me to put down a number on how this (NPAs) will go down, but certainly we feel that these changes will make the system more effective in handling the bad loans,”. After discussions with stakeholders, the government felt that some changes were necessary for the statute book to take the problem head-on.
Though the RBI and the government have been working to tackle the problems of mounting bad loans, the Ordinance on NPAs will define the way forward in this regard, RBI Executive Director Sudarshan Sen said. Terming it as “a very interesting piece” of legislation, Sen said efforts are on to resolve the Non-Performing Assets (NPAs) problem and they would continue, with the Ordinance being one more chapter.
However, sounding a note of caution, he said: “This is a continuing process nothing happens overnight. These are hard problems, these are difficult problems, but we are determined to solve them.” Sen was speaking at the inauguration of an Assocham Global Factoring Summit here.