In order to help banks tackle the menace of mounting bad loans, the government and the Reserve Bank of India (RBI) have indicated that they will step up efforts to clean-up banks balance sheets which are saddled with huge non-performing assets (NPAs), including through the National Infrastructure Investment Fund (NIIF). NIIF, which was like an asset management company, may take over some of the stalled projects and nurture them back to health.
Earlier, the government had toyed with the idea of setting up a special fund to tackle the issue of stressed assets as part of the NIIF, but had opted against it, fearing that it may be seen to be bailing out companies. Also, finance minister Arun Jaitley said that the RBI was finalizing a future course of action for some large defaulters, including initiating action under the Insolvency and Bankruptcy Code (IBC).
Jaitley has stated that under the new ordinance issued, the RBI is at a fairly advanced stage of preparing a list of borrowers where NPA resolution is required under the insolvency law and action on this front is expected soon. He also said that there are already about 81 cases filed under the IBC and 18 cases out of these have been initiated by financial creditors. RBI deputy governor S S Mundhra further added that internal advisory committee had been constituted by the RBI for identifying accounts to be actively considered for resolution.
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