Lok Sabha on Thursday passed Banking Regulation (Amendment) Bill, 2017 which will allow the government to empower Reserve Bank of India to resolve the problem of stressed assets.
The bill, introduced by Finance Minister Arun Jaitley on July 24, replaces Banking Regulation (Amendment) Ordinance, 2017 promulgated in May in the absence of an ongoing Parliament session.
What are the provisions of the bill?
The amendment to the Banking Regulation Act, 1949 seeks to empower the RBI to resolve the problem of non-performing assets.
It will allow the government to enable RBI to initiate insolvency resolution process on specific stressed assets.
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The RBI will also be empowered to issue directives for resolution and appoint authorities or committees to advise the banking companies on stressed asset resolution.
The recovery proceedings will be carried out under the Insolvency and Bankruptcy Code, 2016 that provides for a time-bound process to resolve defaults.
Stressed assets are loans where the borrower has defaulted in repayment or where the loan has been restructured (such as by changing the repayment schedule).
The Bill inserts a provision to state that it will also be applicable to the State Bank of India, its subsidiaries, and Regional Rural Banks.