RBI to Reconsruct Oversight Committee to Tackle Bad Loans

–>The RBI is set to reconstitute Oversight Committee to operationalise the banking ordinance, which was recently cleared by the Union Cabinet to amend the Banking Regulation Act for giving more powers to RBI for effectively dealing with non-performing assets (NPAs) in the banking sector.
–>The existing Oversight Committee was constituted by the Indian Banks’ Association (IBA).
–>This committee main aim is to remove bad loans which have reached to over Rs 8 lakh crore.

Salient Features

Along with this Committee , the RBI has also proposed to include some more members in this so that it can constitute requisite benches to deal with the volume of cases referred to the committee.
–>the existing committee constituted by the IBA has only two members. RBI is also working to make it easy & consistent decision making in those cases which are referred for resolution under the Insolvency and Bankruptcy Code, 2016.
–>RBI plays very important role for the credit rating agencies and is exploring the feasibility of rating assignments being determined by the RBI itself.
–>RBI predict coordination among various stakeholders including banks, ARCs, rating agencies, IBBI and PE firms.
–>The apex bank has already sought information on the present status of the large stressed assets from the banks.

Background

–>The union cabinet had regulated the RBI to issue directions to any banking company or banking companies to initiate insolvency resolution process under the provisions of the Insolvency and Bankruptcy Code, 2016.
–>The ordinance has also empowered the RBI to act opposite to loan defaulters & defaulting companies under the bankruptcy code.