Banking Regulation (Amendment) Ordinance, 2017 – More Power to the RBI


With the figures of Non-Performing Assets (NPAs) running into lakhs of crores and the situation expected to worsen, on the 5th day of May, 2017, the President of India, Mr. Pranab Mukherjee,  gave his approval and promulgated the Banking Regulation Ordinance to bring about amendments in the Banking Regulation Act, 1949.

This Ordinance has been promulgated with a view to bring about amendments in Sec. 35 of the Act by inserting two new sections, viz., Sec. 35AA and Sec. 35AB, which confers more power on the Reserve Bank of India(RBI) in order to tackle the issue of NPAs.

Three ways in which the Ordinance confers more powers on the RBI to deal with the NPAs are:

  1. It empowers the Central Government to authorize, by order, the Reserve Bank of India 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.
  2. The RBI may, on its own accord, issue directions to banks for resolution of stressed assets.
  3. It empowers the RBI to form a committee or committees with such members as the RBI may appoint or approve for appointment, to advise the banks on the resolution of stressed assets.

This Ordinance, though has the force of law, is yet to be passed by both the Houses of the Parliament

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News Source: Live Mint & Financial Express


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