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RBI adds 3 new members to oversight committee for bad loan resolution

LiveMint logoLiveMint 22-06-2017 PTI

Mumbai: The Reserve Bank of India (RBI) has expanded the oversight committee by appointing three more members to the high-level panel that will vet the process of resolving mounting bad loans bogging down the banking sector.

Former chief vigilance commissioner Pradeep Kumar will head the now five-member oversight committee that will work through multiple benches, RBI said in a statement. The expansion follows promulgation of the Banking Regulation (Amendment) Ordinance, 2017 last month. The ordinance had outlined the reconstitution of the oversight committee with an expanded mandate. “The Reserve Bank has since brought the oversight committee under its aegis. The oversight committee will, for the present, have five members, including a chairman, and will work through multiple benches as may be necessary and constituted by the chairman to opine on the cases referred to it by the banks,” it said.

The reconstituted oversight committee will work with an expanded mandate to review, in addition to cases being restructured under the Scheme for Sustainable Structuring of Stressed Assets (S4A), resolution of other cases where the aggregate exposure of the banking sector to the borrowing entity is greater than Rs500 crore, it said. “The circular advising the banks of the above changes and other details of the process to be followed by banks for resolution of identified stressed assets within six months will be issued separately,” it said.

Besides Kumar, the other members of the committee are former SBI chairman Janki Ballabh, former Canara Bank chairman and managing director M.B.N. Rao, former chairman and managing of L&T Finance Y.M. Deosthalee and S. Raman, member of Sebi. Raman would be inducted into the panel from 7 September after he completes the term at Sebi. On 22 May, the RBI had said it will reconstitute the oversight committee under its aegis to operationalize the banking ordinance for resolving the issue of bad loans that have soared to over Rs8 trillion.

The ordinance authorizes RBI to issue directions to banks to initiate the insolvency resolution process in respect of a default under the provisions of the Insolvency and Bankruptcy Code.

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