Concerned with huge pile-up of bad loans in the banking sector in the country, the Government on Friday said the Reserve Bank of India (RBI) has been empowered to ask banks to initiate insolvency proceedings to resolve the non-performing asset or NPA crisis.
“The banks have an unacceptably high-level of NPAs which hinders their capacity to fund economic activities. The Government has issued a general authorisation to the RBI in this regard in line with the ordinance promulgated by President Pranab Mukherjee on Thursday evening,” Union Finance Minister Arun Jaitley told reporters. Explaining how the move would expedite commercial decision makings of the banks, he said, “One of the objects is that when bankers take commercial decisions on commercial and banking considerations, they must have adequate comfort level.”