"While one can't expect a quick-fix solution from government to fix this deep-rooted problem of NPAs, the ordinance does try to address the recent build-up of apathy towards the resolution decision-making process specially among public sector lenders," India Ratings said in a statement.
It also said the ordinance is "one of the many" steps taken by government on the NPA issue.
"A larger question pertains to the independence of banks in making commercial lending decisions and making the regulator a part of this process does pose questions on the effectiveness of bank managements as a custodian of depositors hard earned money," it asked.
"Initiation of proceedings under the Bankruptcy Code may force borrowers and lenders to come on a common platform and accelerate the resolution, given the limited timeframe of 180 days (with provision of a one-time extension of 90 days) under the Bankruptcy Code, else face a liquidation process," Icra said.
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While welcoming this as steps in the right direction, Icra also raised some doubts about the efficacy of the move.
The largest rating agency Crisil, however, termed the move as a "judicious combining of the strengths" of Bankruptcy Code, support of RBI and determination of government.
"The move will give banks the much-needed teeth to resolve their NPA problems without fear of consequences. It is a systemic positive," it said.
"It would be crucial to take further measures that could ease the valuation mismatch, address legal issues which would improve funding interest in the stressed assets by foreign investors," it said.
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