The process of resolution of bad loans will start shortly, Finance Minister Arun Jaitley said on Thursday in the Lok Sabha as it passed a bill which gives RBI the power to direct banking companies to resolve the problem of stressed assets.
Replying to a debate on the Banking Regulation (Amendment) Bill, 2017, Jaitley said the Reserve Bank has already identified top 12 loan defaulters and more cases will be taken up by them for resolution.
"No one can claim the right of equality in not paying banks back. RBI has taken up some difficult cases... I am sure they will take up more," Jaitley said.
The Banking Regulation (Amendment) Bill, 2017, seeks to amend the Banking Regulation Act, 1949 and replace the Banking Regulation (Amendment) Ordinance, 2017, which was promulgated in May this year. The bill was later passed by the Lok Sabha by a voice vote.
Winding up the debate on the bill, Jaitley said some laws were outdated and were acting as "impediment" instead of "expediting resolution".
"We will shortly see the process of resolution coming... Any form of resolution is possible... We need to save the companies, the jobs and we need liquid companies to pay the banks," the finance minister said.
Moving on fast-track, the RBI had in June identified 12 large loan defaulters who account for 25 per cent of the total bad loans in the banking sector.
Action under the Insolvency and Bankruptcy Code has already begun in certain cases, including Essar Steel, Bhushan Steel and Bhushan Power & Steel.
Jaitley said the loans were given during the boom period before the 2008 global financial crises and the present government is trying to find a solution of the non-performing loans.
Replying to opposition charge that bad loans are higher in public sector banks, Jaitley said PSU banks are leaders when it comes to lending for economic development and to industry. Private sector banks have safer portfolio and are more into retail banking, he said.
"There is a risk in industrial financing and PSU banks do it," he said.
With stressed assets reaching "unacceptably high level", the government had brought the Bill replacing the Ordinance.
The measure allows the RBI to initiate insolvency resolution process on specific stressed assets.
The RBI would also be empowered to issue other directions for resolution, appoint or approve for appointment, authorities or committees to advise the banking companies for stressed asset resolution.