New Delhi: An officers' union of public sector banks has expressed doubts over the efficacy of the ordinance on NPA resolution, saying it is just like "applying ointment to cancer".
The All India Bank Officers' Confederation suggested that the government and the Reserve Bank should take "quick actions" on the recommendations of a Parliamentary standing committee to resolve the issue of bad loans which have soared to over Rs 6 lakh crore in the case of state-run banks.
Some of the panel's recommendations that the union highlighted include accountability for Board of Directors and CMD/MDs; allowing banks to write off losses in a staggered manner; and action on violation of lending norms.
"The ordinance is only applying ointment to the cancer. We need surgery," said a statement issued by Confederation's General Secretary D T Franco.
It further said neither the finance ministry nor the RBI has bothered to implement a section of the Banking Companies Act, which made it mandatory to appoint an officer director and an employee director on the boards of banks.
"No one is appointed in the last 20 months. Now there is no public sector bank board which has an Officer Director," the statement added.
Earlier this month, the government issued an ordinance which empowers the RBI to ask banks to initiate insolvency proceedings to recover bad loans, amounting to over Rs 6 lakh crore in case of state-owned lenders alone.
The central bank has been given powers through the ordinance that authorises it to issue "directions to any banking company or banking companies to initiate insolvency resolution process in respect of a default under the provisions of the Insolvency and Bankruptcy Code (IBC), 2016".
