Experts cautioned that this was just the first step in the process of putting the onus on the central bank to reduce the mountain of bad loans. Separately, it also empowered the central bank to direct banks on its own to settle bad loans with defaulters, and to form oversight committees to deal with the issue. The central bank plans to set up a secretariat to oversee the resolution process for the biggest defaults, Bloomberg reported, citing a person it didn’t identify. However, other experts pointed out that while RBI has got enabling powers, errant borrowers still have the means to stall resolution. “The mechanism RBI forms will still be constrained by the provisions of other statutes—whether it be the Corruption Act, Companies Act or Contract Act.

Source: Mint May 05, 2017 16:41 UTC