President Pranab Mukherjee approves Banking ordinance aimed at resolving bad loan cases

President Pranab Mukherjee approved an ordinance that introduces new amendments in the Banking Regulation Act on friday. 

The policy decision on tackling the mounting bad loans or non-performing assets (NPAs) was cleared by the Union Cabinet on Wednesday evening. 

The amendment in the Banking Regulation Act is said to empower the RBI to take strict action against defaulters while being lenient in cases of genuine business failures. 

The policy is also likely to contain guidelines regarding public auction of assets of the defaulting companies/individuals.

"Banking sector ko lekar kuch pramukh nirnay mantri parishad mein hua hai (Important decisions  hane been taken regarding the banking sector during Cabinet meeting)," Jaitley said at a Cabinet briefing. 

"Lekin ek maryada hai ki jab manya rashtrapatiji ko koi mantri parishad sifarish karta hai, uss proposal ki details hum tab tak nahi dete jab tak Rashtrapati Bhavan se aur manya rashtrapatiji ki swikriti na aa jaye (we won't divulge details of the same out of respect,until we get the President's approval)," Jaitley had said.

"It is not possible for me to put down a number on how this (NPAs) will go down, but certainly we feel that these changes will make the system more effective in handling the bad loans," finance secretary Ashok Lavasa said, adding that "we should be able to reach resolution in many of the cases".