A senior government official said that recent amendments in banking rules will help bank solve the problem of debt deferred soon. According to RBI regulations, if the amount of any loan amount is more than 90 days, then it becomes non-performing. The official said, “Under the new ordinance, it has been clarified that according to the Banker Rules, the default will be considered, which means that if the payment of the loan is missed, it will become default from the next day.”

This provision has been added in the Banking Regulatory Act through the previous week’s Ordinance, which would enable the banks to plan before recovering the loan. Especially in the country, the government banks are battling debt or bad debt problems. This is affecting their financial position and their ability to provide loans is decreasing. Now the government has given the RBI the strength to direct the banks to settle such loan accounts through ordinance.

The Government says that it is committed to resolving the problem of bad loan in banking system soon. If there is a case in which the banks need to consider other measures, including changes in management to recover the outstanding amount from the defaulting company, they will not have to wait for it for 90 days. The official said that it is not so that after 90 days the banks will know that the situation is not right about the loan account.

The Assessment and Banker ship Board of India (IBBI) said that the definition of ‘default’ in ordinance has been taken according to the Insolvency and Bankruptcy Code. This means that even if an account has not been put into the NPA category, the recovery process can be started. IBBI chief MS Sahu said that banks will have to decide when to use them for banking or other options.