BANKING REGULATION AMENDMENT ORDINANCE, 2017 | TOOTHLESS TIGER GIVEN TEMPORARY POWER

The President of India, exercising the power conferred by Clause (1) of Article 123 of the Constitution of India, has amended The Banking Regulation Act, 1949 and passed the Banking Regulation (Amendment) Ordinance, 2017.

A new section 35AA has been inserted after section 35A which states that the Central Government may by order authorize Reserve Bank of India to issue directions to any banking company or companies to initiate insolvency resolution process in respect of a default, under the provisions of Insolvency and Bankruptcy Code, 2016.

Further, through new Section 35AB, RBI has been assigned the power to issue directions to Banking Company or Companies for resolution of stressed assets.

Brief Analysis:

After the enactment of Insolvency and Bankruptcy Code, there was a requirement of a parallel amendment in Banking Regulation too. Therefore through the above-mentioned ordinance Government has been assigned the power to initiate strict action against the defaulters like Kingfisher by initiating proceedings under the applicable laws.

Copy of the notification is mentioned below

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