New Delhi: In a major decision aimed at tackling the problem of burgeoning non-performing assets (NPAs) of public sector banks, the Union Cabinet on Wednesday cleared amendments to the Banking Regulation Act, to be effected through an ordinance.
The ordinance is likely to be cleared by President Pranab Mukherjee on Wednesday night. The Cabinet is believed to have approved a policy on the bad debt (NPAs), which is being forwarded to the President for approval.
"It is an amendment in the Banking Regulation Act. Since Parliament is not in session, it will be issued as an ordinance, which needs the President's approval," official sources told IANS.
Finance Minister Arun Jaitley gave hints on the decision, but declined to go into details citing protocol constraints about disclosing something before even the President gets them.
Jaitley merely said the Cabinet has taken an "important decision" relating to the banking sector. Media attempts to elicit details from him failed.
Informed sources said the details of the amendments may be disclosed once the President gives his approval.
According to a study, the current financial stress in the Indian banking system is estimated at Rs 11.80 lakh crore, of which gross NPAs of Rs 2.44 lakh crore have been sold to Asset Reconstruction Companies (ARCs).
The study was jointly carried out by industry body Associated Chambers of Commerce and Industry of India, Society of Insolvency Practitioners of India, and Edelweiss.