The entire nation cried hoarse over the Indian government’s thoughtless move to demonetize high-value currency notes on November 8th, 2016. The tirade against the move strengthened when the move was followed by an awful, chaotic management.
But it wasn’t just the government to face public’s wrath.
Reserve Bank Of India faced much flak from the public for giving in to government’s irrational demands. Much to the ire of the demonetization-ailing Indians, RBI has caused widespread disappointment by not being able to count the recovered notes. In fact, for the first time, RBI failed to release its balance sheet for its fiscal year, which officially ends on June 30. But here’s a silver lining.
The Leading Judgement
This Monday, July 17th, The Gujarat High Court passed orders to continue the bankruptcy court proceedings against Essar, which owes Indian banks about 45 Crores of rupees. This makes 1/4th of total NPAs of Indian Banks!
Essar has in the past sought many alternative solutions to the bankruptcy resolution, all of which failed. Essar even moved High Court for the same. Fortunately, the plea was dismissed. Unlike earlier, both the court and RBI are ready to dive in and get this fixed. But wait, does RBI have the power?
Good changes
It was earlier in June this year that the government amended the Banking Act, thereby giving more powers than before to RBI to tackle NPAs, which currently amount to the tune of a whopping 10 Lakh Crores! This definitely called for a change!
It is also the first time that RBI has directed various Indian banks to pursue the 12 big defaulters. The pesky dozen needs to be taken to task and it is high time the RBI reacted.
Another good change due to the judgment is that the resolution will be quicker than other methods of bankruptcy proceedings. This is because bankruptcy courts seek to complete a case within a year of its opening.
Of course, this won’t magically recover all of India’s NPAs but still shows us hope, which pretty much seemed gone in the midst of the last chaotic 6 months.
