Bad loans ordinance empowers RBI to instruct banks for resolution of stressed assets

NEW DELHI: The ordinance promulgated by the government on bad loans has now empowered the Reserve Bank Of India to issue directions to banks for resolution of stressed assets.

The ordinance authorises Reserve Bank to issue directions to any banking company or banking companies to initiate insolvency resolution process in respect of a default under the provisions of the Insolvency and Bankruptcy Code, 2016.

The ordinance which amended the Banking Regulation Act was promulgated by President Pranab Mukherjee last night.

RBI will also set up overseeing committees.

As per the latest government data, public sector banks’ gross bad loans rose by over Rs 1 lakh crore in the first nine months of last fiscal year to Rs 6.07 lakh crore by end December, from Rs 5.02 lakh crore at the end of March 2016.