The Government on Wednesday initiated the much-awaited process for resolving the burgeoning bad loan crisis plaguing the banking sector.
The Union Cabinet meeting chaired by Prime Minister Narendra Modi approved an Ordinance to amend Banking Regulation Act to resolve the NPA crisis. Also, the Cabinet initiated the process for the disinvestment of ITDC properties and its approval for the declaration of Vijayawada Airport as International Airport.
Briefing media persons after the Cabinet meeting, Arun Jaitley remained tightlipped on the details of banking sector Ordinance on the NPA.
He said the Cabinet has given its mechanism for resolution of stressed assets of bank details of which will be announced after the President’s approval.
“An important decision has been taken in this regard and it is waiting for the President’s nod,” Jaitley said, without elaborating.
The Indian banking industry has been saddled with stressed loans worth about Rs 14 lakh crore. This is around 9.5 per cent of the total loans in the system. A major portion of these loans involve the infrastructure sector including power, steel, roads, and textiles.
Jaitley said the declaration of Vijayawada Airport as International Airport is as per the provisions of the Andhra Pradesh Reorganisation Act.
The proposal will add to improved connectivity to the State Capital of Andhra Pradesh. It will provide wider choice of services at competitive costs to the air-travellers and give a boost to domestic and international tourism and socio-economic development of Andhra Pradesh by bringing in international passengers and cargo traffic, said Jaitley.
Announcing the details of disinvestment of the hotels, Jaitley said the Indian Tourism Development Corporation (ITDC) would offload its 50 per cent equity in Ashok Bhopal and Brahmaputra Ashok Guwahati in favour of the state governments of Madhya Pradesh and Assam, respectively.
In case of Ashok Bharatpur, the ITDC, which is managing the hotel, will hand over the management control to the Rajasthan Government. The States, he added, will have the option to upgrade and operate the hotels by involving private companies or to utilise the properties as per their requirements.
Jaitley also said the Assam Government may develop Ashok Brahmputra hotel at Guwahati as a guest house as there are many private hotels in the State capital. Shares of ITDC closed at Rs 690.10 apiece on BSE, up 2.4 per cent.
The Cabinet also “approved important proposals relating to modifications in the 7th CPC (Central Pay Commission) recommendations on pay and pensionary benefits in the course of their implementation.”
Earlier, in June, 2016, the Cabinet had approved implementation of the recommendations with an additional financial outgo of Rs 84,933 crore for 2016-17 (including arrears for 2 months of 2015-16).
“The benefit of the proposed modifications will be available with effect from January 1, 2016, i.e., the date of implementation of 7th CPC recommendations. With the increase approved by the Cabinet, the annual pension bill alone of the Central Government is likely to be Rs.1,76,071 crore,” said a statement issued by the Government.