RBI Going to Reconstruct Oversight Committee to deal with non performing assets

Reserve bank of India

RBI is going to reconstruct its oversight committee (OC) which deals with non performing assets. The total NPAs amount has been reached to 9 lakh crore approximately. Union government has made amendments in Banking regulation act to provide more powers to RBI so that it can deal more strictly with such kinds of bad loans. The number of members of the committee will be increased (currently two) so that more number of such cases could be dealt at the early basis. The currently existing OC committee is constructed by the IBA (Indian Banks Association).

The new ordinance will give more powers to apex bank to issue directions to any banking company to start insolvency resolution process in case of default under the provisions of IBC. Now RBI can also issue instructions to banks to resolve stressed assets.

Non Performing Assets

A NPA is the loan in the books of financial institutions where payments of loan amount has not been made for a period of 90 days. For example,if a company or any organization fails to make a payment continuously for three months, it may be called as non performing asset. If a company has made all interest payments but not able to repay principal at maturity then it can also be considered as non performing.

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