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ARTICLE · 09 MAY 2017

New Stressed Assets Ordinance – RBI Conferred With Sweeping Powers

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Despite the risk of higher provisioning, banks were not willing to undertake deep surgery or offer higher discounting on stressed assets.

IndiaFinance and Banking
Kartick Maheshwari
Kartick Maheshwari
Kumar Saurabh Singh
Kumar Saurabh Singh
Aashutosh Sampat
Aashutosh Sampat
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Set out below is a short update on the Banking Regulation (Amendment) Ordinance, 2017 issued by the Government of India yesterday (Ordinance) inter alia empowering the Reserve Bank of India (RBI) to intervene and issue directions to banks for resolution of stressed assets.  The Government has promulgated the Ordinance with immediate effect, instead of waiting for an enactment to be passed by Parliament, which could at the earliest, have been possible only in the next parliamentary session in July 2017.

The Ordinance introduces two new sections in the Banking Regulation Act, 1949: Section 35AA and Section 35AB, which empower RBI to intervene in the resolution of stressed assets. These measures are as follows:

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