New Delhi, August 10, 2017

Parliament has given its stamp of approval for the Banking Regulation (Amendment) Bill that sought to replace the NPA ordinance,

giving wide ranging powers to the Reserve Bank of India for dealing with the NPA mess in the banking system.

The Bill will now go in for Presidential assent with the Rajya Sabha on Thursday giving its nod after nearly two hours discussion.

As the Ordinance paves way for an Act, the RBI can issue directions to any banking company or companies to effectively use the provisions of the Insolvency and Bankruptcy Code, 2016 for timely resolution non performing assets.

Justifying the need for an Ordinance, Finance Minister Arun Jaitley said the issue of NPAs were inherited from the UPA government. He said the legislation was already late as the delay has already impacted the capacity of the banks to lend and also hampered the growth of banking sector.

Without contesting Congress member Jairam Ramesh’s calculation that the NPA figures could touch around Rs.15 lakh crore, Jaitley said the stressed assets of the public sector banks will be worth Rs.8.02 lakh crore and he added that the figure is fluctuating. He said the RBI will not handle student or farm loans.

Ramesh urged the Centre not to abdicate its role as “owner” of public sector banks. He reminded the Centre the RBI’s role is that of a regulator.

The Minister said the NPAs, which was started during the UPA regime, is concentrated in sectors like steel, infrastructure, power and textile sectors. He said the issue is a problem of the economy.

When members who participated in the discussions pointed out to the black money stashed abroad, Jaitley said no government has ever taken more action than the NDA government on foreign account details which have come. On the controversial Panama papers leak, he said “every account” in it is being investigated. “We have a rule of law. We do not have system like the neighbouring country where you remove first and then have a trial,” Jaitley said.

[The Hindu Business Line]