Union Finance Minister Arun Jaitley said on Monday that the Reserve Bank of India (RBI) was at “a fairly advanced stage” of preparing a list of borrowers from whom non-performing assets (NPAs) of public sector banks could be recovered under the Insolvency and Bankruptcy Code. The move, he said, would help beleaguered public sector banks (PSBs) recover part of their NPAs, estimated at over Rs 6 lakh crore.
Jaitley’s remarks came after he, along with RBI and finance ministry officials, held a meeting with the heads of PSBs and took stock of problems affecting the lenders.
“Under the new Ordinance issued, the RBI is at a fairly advanced stage of preparing a list of those debtors where a resolution is required through the Insolvency and Bankruptcy Code (IBC) process. You will be shortly hearing about it,” he said.
The Centre issued an Ordinance last month by amending the Banking Regulation Act, to empower the central bank to recover mounting NPAs of the state-owned banks. The Ordinance essentially empowers the RBI to ask banks to initiate insolvency resolution proceedings for bankruptcy code cases and recover bad loans.
Jaitley said the meeting did not discuss the issue of consolidation in the banking space, but added it was being “actively considered”. He refused to divulge any names due to price sensitiveness.
On farm loan waivers being considered by a few Bharatiya Janata Party (BJP)-ruled states, the finance minister said resources would have to be generated by the states themselves and that the Centre would not be part of it. Uttar Pradesh and Maharashtra have already announced the loan waiver, subject to certain conditions.
Source – Business Standard