The Banking Regulation (Amendment) Bill, 2017, which replaces Banking Regulation Ordinance, 2017, was passed in the Lok Sabha on Thursday. The Bill received support from all the parties indicating intent for the resolution of non-performing assets (NPAs).
The Bill authorised Reserve Bank of India (RBI) to issue directions to banks to resolve stressed assets, if necessary, by sending the defaulters to the Bankruptcy Court or using the Insolvency and Bankruptcy Code provisions.
Political support for the issue may convince Judiciary of the dire situation faced by banks and the RBI, and speed up the cases.
HR Khan, Former Deputy Governor of RBI said: The missing link in the ordinance was that State Bank and other nationalised banks were not covered in Section 51 of the Banking Regulation Act, which will now come under the legislation.
Banking Regulation Ordinance came in very handy in the High Court which ruled in favour of the banks and RBI when Essar Steel charged RBI of singling out some borrowers and taking them to the Bankruptcy Court.
The Bill is likely to have a positive impact on all those cases which challenge the bankruptcy proceeding in the higher courts.
RK Bansal, former Executive Director of IDBI Bank said: "The message is very clear, the government wants resolution, RBI wants resolution on all these cases. There is a timeline of 6-9 months on banks and promoters to find a resolution by referring these case to NCLT (National Company Law Tribunal)."
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