“Whereas the stressed assets in the banking system have reached unacceptably high levels and urgent measures are required for their resolution… And whereas Parliament is not in session and the President is satisfied that circumstances exist which render it necessary for him to take immediate action,” the gazette notification stated.
Further details are awaited from Finance
Minister Arun Jaitley’s press conference later today. What is learnt so far is that the new framework may also allow state-owned banks to conduct open auctions of NPAs, wherein cash-rich public sector companies will be encouraged to buy such assets in their sector. It contains a set of fresh guidelines for public auction of assets by the state owned banks for the steel and power sector, which account for a majority of toxic assets.
The aim is to monitor progress on the top 35-40 non-performing assets of all banks. These constitute 60 per cent of all NPAs by value.
The framework also envisages amendments to the Prevention of Corruption Act to exempt commercial decisions by public sector banks from scrutiny by investigating agencies. Both the amendments are likely in the monsoon session of Parliament.
The government has asked banks to provide data on their top NPA accounts. It has also sought more information from consortium leaders.