Press Release :
Dated : 18th July, 2017
Ministry of
Finance
1. Constitution of IAC by RBI
Reserve Bank of India (RBI) has constituted an Internal Advisory
Committee (IAC), which arrived at an objective, non-discretionary criterion for
referring accounts for resolution under Insolvency and Bankruptcy Code, 2016
(IBC).
Reserve Bank of India (RBI) has constituted an Internal Advisory
Committee (IAC), which arrived at an objective, non-discretionary criterion for
referring accounts for resolution under Insolvency and Bankruptcy Code, 2016
(IBC). In particular, the IAC recommended for IBC reference all accounts with
fund and non-fund based outstanding amount greater than Rs.5000 crore, with 60%
or more classified as non-performing by banks as of March 31, 2016.
Accordingly, Reserve Bank of India has issued directions to
certain banks for referring 12 accounts, qualifying under the aforesaid
criteria, to initiate insolvency process under the Insolvency and Bankruptcy
Code, 2016. As regards the other non-performing accounts which do not
qualify under the above criteria, the IAC recommended that banks should
finalize a resolution plan within six months. In cases where a viable
resolution plan is not agreed upon within six months, banks should be required
to file for insolvency proceedings under the IBC.
However, the names and details of borrowers are not disclosed as
prescribed under section 45E of the Reserve Bank of India (RBI) Act, 1934 and
Banking Laws, which provide for the obligation of a bank or financial
institution to maintain secrecy about the affairs of its constituents.
In respect of the above-mentioned 12 accounts, Reserve Bank of
India has advised the banks to make provisions as under:
“The minimum provisions required to be maintained against the said
accounts would be the higher of the following:
(a) 50 per cent for secured portion of the outstanding balance
plus 100 percent for the unsecured portion.
(b) Provisions required to be maintained as per the extant
Asset classification norms.”
The additional provisions, as required in each case, should be
proportionately spread over the remaining quarters of the current financial
year, starting Q2, so that the required provisions are fully in place by March,
2018.
The effect of the provisioning requirement prescribed in respect
of the said 12 accounts would vary for each account and for the respective
banks depending upon the current asset classification, current provisions held,
security coverage, etc.
This was stated by Shri Santosh Kumar Gangwar, Minister of State
for Finance in written reply to a question in Rajya Sabha today.
press release can be access at : http://pib.nic.in/newsite/erelease.aspx issued by Ministry of finance dated 18th July,
2017.
2. RBI has set up an
Enforcement Department (EFD)
RBI has set up an
Enforcement Department (EFD) which would serve as a centralised department to
speed up regulatory compliance; EFD has been entrusted with the responsibility
of enforcement action on commercial banks
Reserve Bank of India (RBI) has informed that they have set up an
Enforcement Department (EFD). EFD would serve as a centralised department to
speed up regulatory compliance. EFD has been set up to separate those who
oversee the possible rule breaches and those who decide on punitive actions so
that enforcement process operates fairly and is evidence based.
The EFD has become functional with effect from April 03, 2017. The EFD has been entrusted with the responsibility of enforcement action on commercial banks.
The EFD has become functional with effect from April 03, 2017. The EFD has been entrusted with the responsibility of enforcement action on commercial banks.
This was stated by Shri Santosh Kumar Gangwar, Minister of State for Finance in
written reply to a question in Rajya Sabha today.
press release can be access at : http://pib.nic.in/newsite/erelease.aspx issued by Ministry of finance dated 18th July,
2017.
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