The Central government has recently issued an Ordinance and amended the Banking Regulation Act.
It has been done to give more powers to the Reserve Bank of India (RBI) to fast-track resolution of stressed assets in a time-bound manner.
Section 35A of the Act was amended, and two Sections were inserted:
- 35 AA authorises the RBI to issue directions to banks to initiate the insolvency process in case a party has defaulted under the provisions of the Insolvency and Bankruptcy Code, 2016
- 35 AB allows the RBI to issue directions to banks for resolution of stressed assets.
The banking regulator has also been allowed to specify one or more authorities or committees to handle bad loans.
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