With the Supreme Court quashing the RBI’s February 12 circular on revised framework for resolution of stressed assets, the central bank, on Thursday, said it will take necessary steps, including issuance of a revised circular, for expeditious and effective resolution of stressed assets.

Governor Shaktikanta Das emphasised that the RBI stands committed to maintaining and enhancing the momentum of resolution of stressed assets, and adherence to credit discipline.

“The order of the Supreme Court mandates the RBI to exercise its powers under Section 35AA ‘in respect of specific defaults by specific debtors’. The powers of RBI, under Section 35AA and other sections of the Banking Regulation Act, 1949, are, therefore, not under doubt.”

With regard to the litigation (on promoter shareholding in Kotak Bank and industry associations’ plea against the February 12 circular), the Governor emphasised that it is always the democratic right of any person, individual or legal person/corporate entity, to challenge the decision of any authority in a court of law. The RBI cannot be an exception to this. “We are undertaking wider stakeholder consultations and decisions are taken on that basis. And you would have seen that over the years, before a decision is taken, the draft discussion paper or the draft circular is always placed on the RBI website and decisions are taken,” explained Das. “But then it has to be appreciated that there are certain regulatory aspects, where considering their criticality, it is not possible for the RBI to place it in the public domain and get comments. These are cases where the RBI has to act on its own wisdom and based on internal consultations with the stakeholders and experts,” he added.

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