These developments have enabled the build-up of “buffers” against unforeseen shocks. 5. Taming the non-performing assets problem: A landmark development relating to resolution of stressed assets is the Insolvency and Bankruptcy Code (IBC) 2016. From the Reserve Bank’s point of view, a great enabler in this context has been the Banking Regulation (Amendment) Ordinance promulgated in May and subsequently enacted in August this year.
By the authority it conferred on the Reserve Bank to issue directions to banks to initiate resolution processes, it scales up the ability of the Reserve Bank to deal decisively with stress in banks’ balance sheets and unclog the flow of credit to grease the wheels of growth.