Banking Regulation (Amendment) Bill 2017

2019 ias preliminary exam test series

Finance Minister Arun Jaitley introduced a Banking Regulation (Amendment) Bill 2017 in parliament to replace the non-performing assets ordinance, which came into effect earlier this year.

The Banking Regulation (Amendment) Bill 2017 will amend the Banking Regulation Act 1949 for this purpose.

The Constitution requires ordinances to be approved by Parliament within six weeks of the next session.

NPA ordinance had conferred powers on the Centre for authorising the Reserve Bank of India to issue directions to banks to initiate insolvency resolution process in respect of a default, under the Insolvency and Bankruptcy Code 2016.

It had also conferred power upon the RBI to issue directions to banking companies for resolution of stressed assets and allow it to specify one or more committees to advise banking companies on resolution of stressed assets.

Highlights of the Bill:

The Banking Regulation (Amendment) Bill, 2017 seeks to amend the Banking Regulation Act, 1949 to insert provisions for handling cases related to stressed assets. Stressed assets are loans where the borrower has defaulted in repayment or where the loan has been restructured (such as by changing the repayment schedule). It will replace the Banking Regulation (Amendment) Ordinance, 2017.

The central government may authorise the Reserve Bank of India (RBI) to issue directions to banks for initiating proceedings in case of a default in loan repayment. These proceedings would be under the Insolvency and Bankruptcy Code, 2016.

The RBI may, from time to time, issue directions to banks for resolution of stressed assets.

The RBI may specify authorities or committees to advise banks on resolution of stressed assets. The members on such committees will be appointed or approved by the RBI.

The Bill inserts a provision to state that it will also be applicable to the State Bank of India, its subsidiaries, and Regional Rural Banks.

Current Affairs for IAS Exam