RBI starts clean up of 25 % of NPAs

Mumbai June 14: A shocking news was delivered yesterday.
The Reserve Bank of India (RBI) on June 13 said that 12 accounts are highly toxic and they represent about 25% of the NPAs. The Central Bank has ordered immediate recovery of funds from these accounts under the new Insolvency and Bankruptcy Code.

Bank officials say that the bad loans of these accounts value a worth of Rs5,000 crore, of which 60% was classified as non-performing by banks as of 31 March 2016. RBI had not disclosed the names of the accounts citing confidentiality.

The accounts were shortlisted by an internal advisory committee (IAC)which was formed by the independent board members of the Central Bank. The RBI has taken this action after an ordinance empowering central bank to initiate bankruptcy process was issued in last month.

The action taken by the central bank assumes Significance after Finance Minister Arun Jaitley recently said that the bank was preparing a list of bad loan defaulters.

Let's hope that RBI will soon initiate action against remaining NPAs also so that banking system health is improved.