The Apex Court had said that the power of the Central bank under Section 35AA had to be exercised in a certain manner
RBI Governor Shaktikanta Das
Reserve Bank Governor Shaktikanta Das said the Central bank would soon come out with a revised circular for effective resolution of stressed assets in the backdrop of the Supreme Court order.
The Supreme Court on Tuesday quashed the RBI circular of last year that pertains to the provisions for referring the defaulter to the National Company Law Tribunal (NCLT) even on a one-day overdue. "The court has said that power of RBI under Section 35AA has to be exercised in certain manner. The validity of Section 35AA of the Banking Regulation Act 1949 stands and henceforth we have to comply with the direction of the Supreme Court and act accordingly," Das said.
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Section 35AA empowers the Central government to authorise the RBI to issue directions to any banking company or companies to initiate insolvency resolution process in respect of a default under the provisions of the Insolvency and Bankruptcy Code (IBC).
"In the light of the Supreme Court order, the RBI will take necessary steps, including issuance of revised circular as may be necessary for expeditious and effective resolution of stressed assets," he said.
Revised framework for resolution of stressed assets issued on February 12, 2018 invited criticism from various quarters, including a parliamentary panel. The RBI substituted the previous guidelines with a harmonised and simplified generic framework for resolution of stressed assets in view of the enactment of the IBC.
RBI cuts interest rate by 0.25%
The Reserve Bank of India on Thursday cut benchmark interest rate by 0.25 per cent for the second time in a row to bring interest rate to the lowest level in one year on softening inflation. The Central bank, however, kept monetary policy stance at 'neutral'. In the second policy review under Governor Shaktikanta Das, the six-member Monetary Policy Committee voted 4:2 in favour of the rate cut.
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