The cabinet cleared the nonperforming asset (NPA) resolution package that includes an ordinance to empower the Reserve Bank of India to more effectively deal with bad assets, a move that will kick off a long-awaited initiative aimed at cleaning up the balance sheets of banks burdened with bad debt. The government proposes to issue an ordinance to amend the Banking Regulation Act, which will empower Reserve Bank to deal much more effectively with stressed assets. Changes are being made to Section 35A of the Banking Regulation Act as also certain provisions of the Bankruptcy Code. These changes will empower RBI to give directions to banks to effectively resolve NPAs. There is a convention that when some proposal is referred to the President then details of it cannot be disclosed till it is approved. Other cabinet decisions include – The cabinet cleared a policy for providing preference to domestically manufactured iron and steel products in government procurement, in line with the ‘Make in India’ initiative; the cabinet approved modifications to the Seventh Central Pay Commission recommendations on pay and pensions;  the cabinet approved the memorandum of understanding with Malaysia for a $2.1-billion urea and ammonia manufacturing plant in that country for dedicated supply to the Indian market; the Cabinet Committee on Economic Affairs approved the foreign investment proposal of Twin Star Technologies Ltd for foreign investment up to Rs.9,000 crores from Twin Star Overseas Ltd, Mauritius. It also approved the disinvestment plan for hotels of India Tourism Development Corp (ITDC), which are being given to state governments.

(Economic Times)