The alarming level of stressed assets / bad loans needs urgent measures for speedy resolution. Towards this, it is argued that the recently passed Banking Regulation (Amendment) Act, 2017 is too little and too late. Discuss while analyzing the necessity and objectives of this act.

The recently passed act provides wide range of powers to the Reserve Bank of India for dealing with the NPA (Non Performing Assets) in the banking system.  The act has amended Banking Regulation Act, 1949 by inserting provisions for handling cases related to stressed assets or NPA (A NPA is a loan or advance for which the borrower has failed to repay the principle or interest for a period of 90 days. )
Also by this act, RBI got more powers to issue directions for initiating proceedings in case of a default in loan payment which makes Banks high cautious about defaulters and also provides loans to people in an effective way.
The RBI may also form committees to advise banks on the resolution of stressed assets. This may give more effective mechanism in dealing with non-performing assets
Objectives

• The Bill basically empowers the Reserve Bank of India (RBI) to give directions to banks to act against loan defaulters.
• Initiating solvency resolution process as soon as possible
• Speedy recover from defaulters. The recovery proceedings will be carried out under the Insolvency and Bankruptcy Code, 2016 that provides for a time-bound process to resolve defaults.

Though there are many provisions against defaulters in this it is argued that the Banking Regulation (Amendment) Act, 2017 is too little and too late because delay has already impacted the capacity of the banks to lend and NPAs have already hampered the growth of banking sector.