Ordinance on bad loans aims at maximum recovery for banks: SBI

New Delhi: The State Bank of India on Monday said that it will help to maximise recovery for the banking system.

"This is a very welcome move, because it will hopefully help make decisions in a time-bound manner. The idea behind the resolution is to maximise recovery for the banking system," SBI MD Rajnish Kumar told BTVi in an interview.

Noting that the Joint Lenders` Forum framework has not been very effective, he said, "Decisions need to be taken quickly. Resolution needs to be faster, all options can be discussed. It cannot be forever that decisions are not taken."

He further added that under the current asset classification norm, it is not desirable that the banks simply wait for further deterioration of the asset quality without taking a decision. "The bankers do not have much choice but to decide one way or the other."

The government on May 5 issued an ordinance empowering the Reserve Bank of India (RBI) to direct banks to initiate insolvency process against the defaulters. The ordinance also empowered RBI to appoint an oversight committees to advise the banks on the bad loans.

With IANS Inputs