Cabinet to amend Section 35A of Banking Regulation Act to tackle NPAs

A proposal has been approved by the Cabinet to amend Section 35A of the Banking Regulation Act through ordinance route, sources said. This will empower the Reserve Bank to deal effectively with the problem of mounting bad loans.

The said amendment will empower the RBI to issue directions to the banks to recover non-performing assets (NPAs).

The government has taken some important decisions in respect of the banking sector, Finance Minister Arun Jaitley said while briefing the media.

“There is a convention that when some proposal is referred to the President, then details of it cannot be disclosed till it is approved. As soon as approval comes, details will be shared,” the Finance Minister said.

ALSO READ: Indian banking system can be more robust with consolidation of some public sector banks: Urjit Patel

By December 31, 2016, bad loans rose by over Rs 1 lakh crore from January to September of last fiscal to Rs 6.07 lakh crore.

Gross NPA pf PSBs stood at Rs 5.02 lakh crore at the end of March 2016, which was Rs 2.67 lakh crore at the end of March 2015.

“You see, the amounts are large, but the amounts are restricted. It’s not that hundreds and thousands of businesses have created this problem. The problem of big NPA is confined essentially to 30-40, at best 50 companies, and therefore, those 40-50 accounts need to be resolved,” Jaitley said on Wednesday.

The Defence Minister further went on to say “if you look at the whole structure, there are enough instruments available for settlements as far as the banking system is concerned. There are different legislations where action can be taken”.

With inputs from PTI.

ALSO READ: Arun Jaitley promises no surprises in GST rate fixation