President Pranab Mukherjee gave his nod to the ordinance dealing with the banking sector’s non-performing loans and the amendment to the Banking Regulation Act. After the president agreed with the ordinance act banking shares such as State Bank of India, ICICI Bank, Federal Bank, Canara Bank, Punjab National Bank, Bank of Baroda and Kotak Mahindra Bank were outperforming in an otherwise lacklustre trading session.
Non-performing assests (NPAs) also known as bad loans in banks had risen to Rs 6.07 lakh crore last year, and the public sector had a share of Rs 5.02 lakh crore in it.
The Union Cabiner now has empowered the Reserve Bank of India (RBI) to act against wilful defaulters. The ordinance has been sent to the president for his final approval. According to NDTV profit A senior finance ministry official said “It is part of a broader plan to resolve bad loans with banks’ issue that has been a major hurdle in the economy from achieving its full potential.”
Experts are also sating that the ordinance will help the banks to deal with the stressed assets. As the next session of the parliament will start in the second week of July, so till then making any amendment to the act will be on hold.