The industry body, Associated Chambers of Commerce and Industry of India (Assocham) in its latest report has said that the Banking Regulation (Amendment) Ordinance has empowered the Reserve Bank of India (RBI) to take up the non-performing assets (NPAs) worth around Rs 8 lakh crore for faster resolution by March 2019. It also noted that the move has the potential to bring down the bad loans as well as significantly improve the financial health of banks. The report also highlighted that RBI would succeed in resolving non-performing assets (NPAs) worth around Rs 8 lakh crore by the first quarter of financial year 2019-20.
Assocham study titled 'NPAs Resolution: Light at the end of tunnel by March 2019' has indicated that this would be helped by a combination of several factors such as turnaround in the economic cycle and some resolute steps by the government and the RBI to fix the issue. The report also said that while all the NPAs could be put on the altar of Insolvency and Bankruptcy Code (IBC) resolution mechanism, it has to be seen how much and how fast they actually goes out from the balance sheets of banks. It further pointed out that it is no secret that NPAs are a big drain on the financial health of banks especially public sector banks (PSBs).
Assocham Secretary General D S Rawat has stated that the 16-month Asset Quality Review (AQR) exercise that ended in March 2017 pulled out NPAs from the closet and after this deep surgery strong medicine was required to quickly heal the system. Therefore, he also said that somewhat bitter medicine came in the form of the Ordinance promulgated by the President in May. He added that the government gave wide-ranging legislative powers to the RBI to issue directions to lenders to initiate insolvency proceedings for the recovery of bad loans that have reached unacceptably high levels.