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Cabinet okays ordinance to tackle FIs' NPAs

Tara Shankar Sahay in New Delhi

The Union Cabinet on Tuesday decided to promulgate an ordinance to tackle the problem of burgeoning non-performing assets of banks and financial institutions as part of the ongoing financial sector reforms.

The move aims at clearing of NPAs by way of securitisation and reconstruction of financial assets and enforcement of security interest.

The ordinance would enable the banks and financial institutions to create a market for the securitised assets and help improve their asset liability management, Union Law Minister Arun Jaitley said after the meeting.

The ordinance would also enable banks and FIs to take possession of securities and sell them and appoint receivers pending such sale.

"This step is necessary to tackle the problem of NPAs with the banks and will mark major reforms in the financial sector," Jaitley said, adding that the ordinance would also enable asset reconstruction companies to be set up in the country.

Jaitley said agricultural loans and small loans would be exempted from this.

The Cabinet approved the setting up of the central manpower export promotion council which would play a role of an advisory promotion body in the area of manpower export.

Jaitley said the body would have the labour minister as the chairperson and 18 other members appointed by the central government for five years.

The Cabinet also approved the establishment and running of the Indian overseas workers' welfare fund.

The fund would be used for arranging the return tickets for workers who get stranded in foreign countries and for transport of the dead bodies of the workers.

ONGC plan to buy Sudan field pie gets nod

The Cabinet also approved ONGC Videsh Ltd's proposal to acquire 25 per cent stake in a Sudanese oil field for Rs 3750 crore ($750 million) that would give India 3 million tonne of additional crude oil annually.

The proposal to acquire Canadian Talisman's 25 per cent stake in Greater Nile Oil Project in Sudan was cleared at the Cabinet meeting chaired by Prime Minister Atal Bihari Vajpayee, said Petroleum Minister Ram Naik.

The approval is subject to a rate of return not less than 14 per cent from the project, said Naik.

Naik pointed out that GNOP is jointly operated by a consortium of Chinese National Oil Company, (30 per cent), Talisman Energy, Canada (25 per cent) and Sudan National Oil Company (5 per cent).

He said Sudan had emerged as an oil-rich country and the GNOP was a major oil-producing asset with its current production of approximately 12 million tone which is equal to the production of Bombay High oilfield.

Financial restructuring of NIL cleared

The government cleared the proposal for the financial restructuring of state-owned National Instruments Limited, including conversion of Rs 6 million loans into equity and writing off interest up to Rs 1.38 billion.

NIL, which was referred to the Board for Industrial and Financial Reconstruction in 1992 after its net worth was eroded, manufactures sophisticated opto-medical and opto-electronics instruments.

Additional inputs: Reuters, PTI

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