RBI’s new bad loan norms will cripple banking sector: Parliamentary panel
By Anuradha Shukla | Express News Service | Published: 11th April 2018 02:00 AM |
Last Updated: 11th April 2018 05:56 AM | A+A A- |
A woman walks past the Reserve Bank of India (RBI) head office in Mumbai. | REUTERS
NEW DELHI: Taking serious note of bankers’ concern over RBI’s revised NPA guidelines, a Parliamentary panel has asked the central bank to relax the “harsh” norms so that the lending process doesn’t come to a standstill.
According to RBI’s revised framework on resolution of stressed assets released on February 12, banks should classify even one-day delay in debt servicing as default, formulate a resolution plan within 180 days of default, and refer the case to the National Company Law Tribunal (NCLT) if it remains unresolved even after the 180-day period.
Lenders feel the banking regulator has tightened the rules to such an extent that it is difficult to implement.
“The rules should not kill the lending process. There are certain clauses that are too strict and can be reconsidered,” said the Committee on Subordinate Legislation of Rajya Sabha, headed by Congress leader T Subbarami Reddy.
The panel separately met bank officials, Financial Services Secretary Rajiv Kumar and Corporate Affairs Secretary Injeti Srinivas to understand the problems affecting the banking sector and the intricacies involved in approaching NCLT.Top officials of Punjab National Bank, Oriental Bank of Commerce, Canara Bank, Union Bank of India, United Bank of India, Allahabad Bank, and IDBI Bank attended the meeting.
After the meeting, Reddy said RBI has promised to look into the suggestions made during the meeting. Meanwhile, the finance ministry also expressed concern over the norms and feels there is scope for improvement.
“Most of the banks feel the one-day default provision for NPA classification is too harsh and not practical. We will be looking into the request made by the banks in this regards and take a call. It should be made more practical,” said a senior official in the Department of Financial Services.
Earlier in March, the Indian Banks’ Association had written to RBI requesting it to do away with one-day default identification and asked the apex bank to allow a 30-day cure period instead. However, there was no response from the central bank.
