1. Bad loans cleanup ordinance: Banks must seriously implement time-bound solutions, says Chanda Kochhar

Bad loans cleanup ordinance: Banks must seriously implement time-bound solutions, says Chanda Kochhar

Chanda Kochhar said today that the banking amendment ordinance enacted today will help in timely resolution of NPAs among Indian banks, but the lenders themselves would need to take it upon themselves seriously to implement the agreed upon programme in a time-bound manner.

By: | Published: May 5, 2017 6:07 PM
ICICI Bank MD & CEO Chanda Kochhar said that the ordinance will expedite process of resolution of NPAs in a time-bound manner, and will give more power to RBI. (Image: Reuters)

Prominent banker Chanda Kochhar said today that the banking amendment ordinance enacted today will help in timely resolution of the NPAs (non performing assets) among Indian banks, but the lenders themselves would need to take it upon themselves seriously to implement the agreed upon programme in a time-bound manner.

Earlier today, Finance Minister Arun Jaitley said that the government has notified The Banking Regulation (Amendment) Ordinance, 2017, empowering the Reserve Bank of India to direct banks to initiate insolvency proceedings against defaulters. Under the provisions of the ordinance, RBI can now designate one or more authorities to advise banks on dealing with the problem of their non-performing assets, which were at a staggering Rs 9.64 lakh crore as at the end of December 2016.

Chanda Kochhar, Managing Director and Chief Executive Officer of India’s largest private sector lender ICICI Bank, said after Jaitley’s comments that the NPA ordinance will expedite the process of resolution of NPAs in a time-bound manner, adding that its will give more power to RBI and ensure timely decision on NPAs.

She also said that the proposed oversight committee will ensure faster clearance of various schemes formulated by banks for resolution of specific bad loan cases. However, it would be important for the banks to to take the process of the NPAs resolution seriously and move in a time-bound manner to implement the agreed upon scheme, she said.

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The discourse on solving the problem of bad loans spread wide across the banking system in the country recently gained momentum when various government agencies highlighted the issue, which is choking the lenders and is, in turn stifling credit growth. It has now become imperative to tackle record stressed loans of Rs 9.64 lakh crore held by Indian banks as of 31 December 2016, much above 12% of their total loans, as the burden constrains lending and delays private investment.

Earlier, HDFC group Chairman Deepak Parekh too welcomed the move, terming it as a step in the right direction. “Tackling NPAs is of paramount importance not only for banking but for economy,” Parekh said in an interview to ET Now, adding that the rating agencies too have earlier highlighted the issue. He said that now there are clear directions available to defaulting companies, banks and other agencies, about the implications of possible failure in repayment of loans.

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