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4
May 2017
In
a major decision aimed at tackling the mounting non-performing assets (NPAs) of
public sector banks, the Union Cabinet on Wednesday night issued an ordinance
to amend the Banking Regulation Act that will empower the RBI to go after
defaulters.
The
Cabinet is believed to have approved a policy on bad debts (NPAs), which is
being forwarded to President Pranab Mukherjee for approval. The President is
likely to clear the ordinance on Wednesday night itself. The Total Investment & Insurance Solutions
"It
is an amendment in the Banking Regulation Act. Since Parliament is not in
session, it will be issued as an ordinance, which needs President's
approval," official sources told.
Finance
Minister Arun Jaitley gave hints on the decision, but declined to go into the
details citing protocol constraints about disclosing something even before the
President gets it.
Jaitley
merely said the Cabinet has taken an "important decision" relating to
the banking sector. Media attempts to elicit details from him failed.
It
is believed that the ordinance would give powers to the Reserve Bank of India
(RBI) to take strict action against defaulters while being lenient in cases of
genuine business failures.
The
policy is also likely to contain guidelines regarding public auction of assets
of the defaulting companies or individuals. The Total Investment & Insurance Solutions
The
ordinance assumes significance in the context of the government's attempts to
get Vijay Mallya extradited to India. His Kingfisher Airlines had defaulted to
the tune of about Rs. 9,000 crore in loans to public sector banks. As banks
started hounding him for recovery of their loans, Mallya fled to London last
year. The Total Investment & Insurance
Solutions
Informed
sources said the details of the amendments may be disclosed once the President
gives his approval. The Total
Investment & Insurance Solutions
According
to a study, the current financial stress in the Indian banking system is
estimated at Rs 11.80 lakh crore, of which gross NPAs of Rs 2.44 lakh crore
have been sold to Asset Reconstruction Companies (ARCs). The Total Investment & Insurance Solutions
The
study was jointly carried out by industry body Associated Chambers of Commerce
and Industry of India, Society of Insolvency Practitioners of India and
Edelweiss.The Total Investment & Insurance
Solutions
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