NPA Battle: RBI Likely to Start Insolvency Proceedings

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Emboldened by the Banking Regulation (Amendment) Ordinance, the RBI is expected to push for resolution of bad loans worth around Rs. 8 lakh crore by March 2019, a move that could bring down the NPAs and improve the financial health of banks, a study by Assocham said, Firstpost reported. “So, it should be safe to assume that the non-performing assets (NPAs) mess would largely be resolved by the first quarter of financial year 2019-20,” Assocham study titled ’NPAs Resolution: Light at the end of tunnel by March 2019’ said. This would be helped by a combination of several factors — turnaround in the economic cycle and some resolute steps by the government and the Reserve Bank of India to fix the issue, it said. Although entire NPAs could be put on the altar of Insolvency and Bankruptcy Code (IBC) resolution mechanism, it has to be seen how much and how fast they actually goes out from the balance sheets of banks which at this point of time seem very stressed, it said. It is no secret that NPAs are a big drain on the financial health of banks especially public sector banks (PSBs). Read more.