New Delhi: The government is all set to introduce in Parliament the much-awaited Banking Reforms Bill, which would grant banks more powers to recover their dues from defaulters and reduce non-performing assets (NPA) of banks and Financial Institutions (FI), now at over Rs 100,000 crores.



The government also directed banks to be merciless with willful loan defaulters and opt for one-time settlements to recover their dues. "We have thought of a legislation where creditors will enjoy the rights to recover their dues easily. The legislation is ready and we hope to take it to Parliament in the next session," Finance Minister Yashwant Sinha told reporters after a function organised by United Bank of India on June 15.



The Bill includes provisions on foreclosure and securitisation of assets, which would enable creditors to recover the due amounts more easily from the collateral pledged with them.



Sinha said strengthening of creditors' rights would improve bond prices, share prices of banks, create a market for assets, provide an incentive to recover sticky assets and improve banks' financial health further. Sinha said the proposed Asset Reconstruction Company (ARC) is also scheduled to come up by this month.



The ARC and the enabling Laws are intended to reduce the pile of non-performing assets with banks and FI's. "The ARC will have the specialisation to handle bad loans," Sinha said.



He also said a Deposit Insurance Corporation (DIC) would be set up after necessary legislative changes to safeguard the interest of small depositors.

PTI