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23
May 2017
 |
RBI (The Total Investment & Insurance
Solutions)
Outlining its plan to deal with the mounting
problem of banks' bad loans, the Reserve Bank of India (RBI) on Monday said it
will reconstitute the oversight committee (OC) to operationalise the banking
ordinance for resolving the issue of non-performing assets (NPAs). The Total Investment & Insurance
Solutions
"It
has been decided to reconstitute the OC under the aegis of the Reserve Bank and
also enlarge it to include more members so that the OC can constitute requisite
benches to deal with the volume of cases referred to it," the RBI said in
a release here.
The existing OC, which has two members, was
constituted by the Indian Banks Association (IBA) in consultation with the
RBI. The Total
Investment & Insurance Solutions
The
government earlier this month passed the Banking Regulation (Amendment)
Ordinance, 2017, that allowed more power to the RBI to tackle the NPAs' issue.
It has been empowered to issue directions to commercial banks to initiate
insolvency proceedings for recovering bad loans.
The
NPAs, or bad loans, of state-run banks at the end of last September rose to Rs
6.3 lakh crore (almost $100 billion), as compared to Rs 5.5 lakh crore at the
end of June 2016.
The RBI said it is also working on a
framework to facilitate an "objective and consistent" decision-making
process for cases that may be referenced for resolution under the Insolvency
and Bankruptcy Code, 2016. The Total Investment & Insurance Solutions
The apex bank said it has already sought
information on the current status of the large stressed assets from the banks. The Total Investment & Insurance
Solutions
"The
RBI would also be constituting a committee comprised majority of its
independent board members to advise it in this matter," it added.
The
RBI said it envisages an important role for the credit rating agencies "in
the scheme of things."
"With
a view to preventing rating-shopping or any conflict of interest, is exploring
the feasibility of rating assignments being determined" by the RBI itself
and would be paid for from a fund to be created out of contribution from the
banks and the Reserve Bank."
Moreover,
the proper exercise of the enhanced empowerment would require coordination with
and cooperation from several stakeholders including banks, rating agencies and
asset reconstruction companies (ARCs), among others, the RBI added. The Total Investment & Insurance Solutions
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