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Ordinance likely to handle NPAs

The central government has approved a set of key measures to handle non-performing assets (NPA) in the banking system and has sent the suggestions to president Pranab Mukherjee for his approval. The government may then issue an ordinance. The measures suggested could well be a new NPA policy of the government and may include amendments to the Banking Regulation Act. According to news reports, the measures include special powers to be given to the oversight committee set up under the Scheme for Sustainable Structuring of Stressed Assets (S4A). It is expected that the new policy will allow banks to take a haircut within permissible limit. There will be a new formula in this regard. News reports also suggested president Pranab Mukherjee had signed the ordinance. NPAs in public sector banks are said to have crossed the Rs 1 lakh crore mark during the April-December period of 2016-17. The gross NPAs of these banks in the first nine months of the current fiscal increased to Rs 6.06 lakh crore by 31 December 2016, from Rs 5.02 lakh crore during 2015-16. For private sector banks, gross NPAs rose to Rs 70,321 crore from Rs 48,380 crore.

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