President Pranab Mukherjee today promulgated an ordinance authorising the Reserve Bank to issue directions to banks to initiate insolvency resolution process in the case of loan default.
This will provide a big boost to the government's efforts to tackle mounting bad loans.
The Banking Regulation (Amendment) Ordinance, 2017, also empowered the central bank to issue directions with regard to stressed assets.
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The RBI has been equipped with powers to specify one or more authorities to advise banks for dealing with the problem of non-performing assets (NPAs) which have reached "unacceptably high levels".
The ordinance has been issued in light of the urgency to deal with the toxic loans that have crossed the Rs 6 lakh crore mark.
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