Banking regulation bill passed in Lok Sabha

The Banking Regulation (Amendment) Bill, 2017, which was promulgated in May this year, was passed in the Lok Sabha on Thursday. Finance Minister Arun Jaitley had introduced the bill in the Lower House on Monday.

The ordinance was promulgated in May as the immediate action was required to combat the unacceptably high levels of stress in the banking system. It was promulgated in May as Parliament was not in session then and banking system needed immediate intervention.

This amendment will replace The Banking Regulation Act 1949, giving the government power to authorise the Reserve Bank of India to issue directions to banks in order to initiate insolvency resolution in case of a default. The bill empowers the RBI to issue directives for resolution and appoint authorities or committees to advise the banking companies on stressed asset resolution.

Non-performing assets of banks have risen to over Rs 9 lakh crore and it had become necessary for the RBI to intervene. Trinamool Congress member Sougata Ray had opposed the ordinance in the Lok Sabha, calling it a "desperate step by a desperate government".