Section 35AA of The Banking Regulation Act, 1949 in hindi
Power of the Central Government to authorize Reserve Bank for issuing directions to banking companies to initiate insolvency resolution process.
1[35AA. Power of Central Government to authorise Reserve Bank for issuing directions to banking companies to initiate insolvency resolution process.--The Central Government may, by order, authorise the Reserve Bank 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, 2016 (31 of 2016). Explanation.--For the purposes of this section, "default" has the same meaning assigned to it in clause (12) of section 3 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016).]
Summary
- The Central Government can formally authorize the Reserve Bank to order banks to start insolvency proceedings.
- This power is used when a borrower has defaulted on a loan.
- The proceedings are carried out under the rules of the Insolvency and Bankruptcy Code, 2016.
- A default is defined as the failure to pay a debt when it is due.
Practical examples
FAQ
1. What does default mean under Section 35AA of The Banking Regulation Act, 1949?
Under Section 35AA of the Act, default has the same meaning as it does in the Insolvency and Bankruptcy Code, 2016, which generally means failing to pay a debt.
2. Can the Reserve Bank order a bank to start an insolvency process without government permission under Section 35AA of the Banking Regulation Act?
No, Section 35AA of the Act requires the Central Government to first issue an order authorizing the Reserve Bank to give such directions.
3. Which law governs the actual resolution process mentioned in Section 35AA of The Banking Regulation Act, 1949?
The process is initiated under the provisions of the Insolvency and Bankruptcy Code, 2016, as specified in Section 35AA of the Act.
Test yourself
1.Under Section 35AA of The Banking Regulation Act, 1949, who gives the initial authorization for the Reserve Bank to issue directions?
2.What specific situation triggers a direction under Section 35AA of The Banking Regulation Act, 1949?
3.Which 2016 law is mentioned in Section 35AA of The Banking Regulation Act, 1949?
4.Under Section 35AA of The Banking Regulation Act, 1949, the Reserve Bank's role is to: