Mr. Arun Jaitley, on Monday, introduced the Banking Regulation (Amendment) Bill, 2017 in the Parliament.
This bill seeks to amend the Banking Regulation Act, 1949 and replace the Banking Regulation (Amendment) Ordinance, 2017, which was promulgated in May 2017.
It has been introduced with the object of authorizing the Reserve Bank of India to provide directions to the banking companies to resolve the problem of stressed assets.
It empowers RBI to initiate insolvency resolution process on specific stressed assets and further with the power to issue other directions for resolution, appoint or approve for appointment, authorities or committees to advise the banking companies for stressed asset resolution.
It was however stated that the recovery proceedings would be governed by the Insolvency and Bankruptcy Code, 2016, which was promulgated with the object to provide for a time-bound process to resolve defaults.
Mr. Jaitley introduced the bill amid the protests that were going on in the Parliament. Before the bill was introduced, Trinamool Congress member Sougata Ray said he was opposed to the banking regulation ordinance and said it was a “desperate step by a desperate government”.
He said that non-performing assets of banks have risen to over Rs. 9 lakh crore and now RBI is being given power to refer the cases to Insolvency and Bankruptcy Board. The RBI has failed in taking a note of the amount of the currency that has been submitted after demonetization, which is a clear indicator that the provision of such powers will detract the Bank from macro-economic to micro-economic issues, thereby rendering the management, useless.
When asked about his reply to the remarks of the opposing Counsel, the Finance Minister stated that the issue did not relate to the introduction of the bill and would be dealt with, when the bill was discussed.