Banking Act Amendments Will Help Resolve Bad Loans, Says Finance Secretary Lavasa

Amendments to the Banking Regulation Act would help in effectively resolving the bad loans problem, Finance Secretary Ashok Lavasa said onThursday.

"It is not possible for me to put down a number on how this (non-performing assets or NPAs) will go down but certainly we feel that these changes will make the system more effective in handling the bad loans," he told reporters in New Delhi.

The Cabinet on Wednesday approved promulgation of an ordinance to amend the Banking Regulation Act for resolution of the NPA crisis.

With the professionalism that exists in the country's banking system and the participation of the promoters themselves, "we should be able to reach a resolution in many cases", Lavasa said. The amendments would enable the Reserve Bank of India and lenders to take effective steps to deal with the bad loans problem, he added.

Also Read: RBI May Be Given More Powers Under New Bad Loan Resolution Plan

After discussing the issue with stakeholders, the government came to the conclusion that some changes were necessary in the statute to effectively deal with mounting bad loans in the banking sector, Lavasa said, but did not disclose the details of the proposed amendments.

He believes there is enough appetite in the market to buy stressed assets, "We should not judge the capacity that is there in the market because people do have appetite for investment in the Indian market. India is probably one of the best destinations for investment at this point of time."

He further said the NPA situating has not worsened in the recent past and there has been a marked improvement in some of the infrastructure sectors like power and road.