New Delhi, (IANS) - Briefing the media on the ordinance that was signed by the President late night on May 4, Finance Minister Arun Jaitley said they will empower the RBI in relation to specific non-performing stressed assets under the Bankruptcy and Insolvency Code.
The insertion of sections 35AA and 35AB will ensure that the power of initiating the insolvency proceedings under the Insolvency and Bankruptcy Code and will remain with the RBI. The RBI will be empowered to intervene in specific cases to resolve the NPAs and to bring them to a definitive conclusion. The new provisions also empower the RBI to form oversight committees in relation to specific stressed assets.
The finance minister also made it clear that the RBI's steps under the ordinance will be binding on all. One of the objects will also be that bankers take commercial decisions and have sufficient "comfort level". He referred to moves to amend the Prevention of Corruption Act to strengthen the banks decision-making capacity, adding that it was being considered by a Parliamentary Committee.
"One of the key problems of the banks is the problem of assets. Banks need to be robust to ensure growth. If banks have unacceptably high NPAs, it hinders their capacity. In order to empower the RBI further in this effort the Cabinet on Wednesday recommended to the President to issue an ordinance. It was signed late last night by the President and notified today morning," Jaitley said. He also disclosed that general authorisation empowering the RBI with the policy statement has been issued separately.