Public sector banks (PSBs) will soon create a dedicated mechanism for managing stressed accounts, acting finance minister Piyush Goyal said on Friday.
“I have discussed improving credit flow to strengthen Indian economy while mitigating risk flow associated with that. A panel under Punjab National Bank (PNB) non-executive chairman Sunil Mehta will give its report in two weeks over setting up of Asset Restructuring Company (ARC) or Asset Management Company (AMC) to resolve stressed assets,” Goyal said, following a meeting with PSB chiefs on the issue of banks’ non-performing assets (NPAs).
Indian banking system is reported to be under severe stress with accumulated non-performing assets (NPAs) or bad loans surging to Rs 10.17 lakh crore of total loans, and stressed assets at nearly 15 per cent of the total loans disbursed. The proposed mechanism is aimed at formulating a faster resolution of such cases.
Noting that the State Bank of India has a ‘proven mechanism’ to take faster decisions in a transparent manner, Goyal, who holds temporary charge of the finance portfolio in the absence of Union Finance Minister Arun Jaitley, reported to be recovering from a kidney surgery, added all bank showed willingness to set up such a mechanism for faster resolution of stressed accounts and under the proposed mechanism, some of the lenders may also consider setting up oversight committees and bring in external expertise to enable faster decision making.
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