4Apr

Government devising to legitimize RBI to pact with stressed assets

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The government is considering legislation to legitimize the Reserve Bank of India (RBI) in powerful supervision of stressed assets, in tandem with its expansive plan to resolve banks’ bad loans.

The government could issue an authorization enabling the central bank to direct banks on trading with stressed assets as altering the Banking Regulation Act could take time.

Indian banks hold stressed loans of Rs 9.65 trillion (USD 148.41 billion) as of end-december, Santosh gangwar, minister of state for finance, said last month.

banks continue to see sour loans growing, although the step has slowed. Stressed loans consists bad loans and restructured or rolled over loans.

Banks currently face diligence from investigating agencies over stressed assets and the directions issued by the central bank could also look into that, the report added.

Reserve bank of India (RBI) Deputy Governor Viral acharya planned the formation of a private agency or a government asset management individua to purchase and organize the soured loans differently this year. Bankers, were critic as they felt the idea would add more intricacy and delay restructuring.

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