SYNOPSIS: This Act has been deemed to have come into force on the 4th of May 2017, through a notification in the official gazette dated 25th of August 2017. This Act was introduced in order to amend the parent Act i.e. Banking Regulation Act 1949.
THE CHANGES: Mentioned below are the changes that have been incorporated to the Banking Regulation Act 1949 through this Amendment.
- Power of Central Government: Section 35 AA has been incorporated to the principal Act through this Amendment Act. This section speaks about the Power of Central Government to authorise Reserve Bank for issuing directions to banking companies to initiate insolvency resolution process.
- Power of RBI to issue Directions: Sub section 1 of Section 35 AB incorporated through this Amendment Act provided power to the Reserve Bank of India, the power to issue directions to any banking company or banking companies for resolution of stressed assets.
- Advice on Resolution of Stressed Assets: Sub section 2 of Section 35 AB provides that the Reserve Bank may specify one or more authorities or committees and appoint its members, to advise any banking company or banking companies on resolution of stressed assets.
- Applicability: With the introduction of this Amendment Act, The Banking Regulation (Amendment) Ordinance, 2017 has been repealed.
EFFECTS OF THE AMENDMENT ACT: With the Banking Regulation (Amendment) Act 2017, the Reserve bank of India has been provided with powers to issue directions to Banking Companies regarding Resolution of Stressed Assets. Thus, the Amendment Act of 2017 provides RBI with control over such Banking Companies. In fact, such power to issue directions also included the power to RBI to appoint members and form a Committee in order to advice banking companies on the Resolution of Stresses Assets.
The Amendment Act also provides the Central Government with power to the authorize the Reserve bank of India to give directions to Banking Companies regarding the initiation of Insolvency Resolution Process.