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New RBI Push To Tackle Bad Loans

As the non-performing assets (NPAs) of banks reached a record high, the Reserve Bank of India met heads and senior officials of various banks to discuss ways of tackling the issue of stressed assets. The meeting was attended by heads of leading Indian banks.

“The focus of the meeting was on resolution of stressed loans. The RBI had sought our views and suggestions to tackle the bad loan problem,” a bank official said. NPAs have risen to about 17 per cent of total loans, the highest level among major economies. They are about 8.4 per cent of the GDP, according to Credit Suisse.

Earlier this month, the government gave wide-ranging legislative powers to the RBI to issue directions to lenders to initiate insolvency proceedings for the recovery of bad loans. It has also empowered the regulator to issue directions to banks for resolution of stressed assets.

Non-performing assets (NPAs) of banks have risen to about 17 per cent of total loans, the highest level among major economies. They are about 8.4 per cent of the GDP, according to Credit Suisse.

The Reserve Bank also came out with a notification which clarified its powers under the NPA ordinance. It also talked about formation of oversight committees (OCs) under RBI’s aegis and formation of independent committees to decide a framework for reference for the Insolvency Code (IBC).

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