FM Arun Jaitley to meet RBI Governor

FM Arun Jaitley to meet RBI GovernorUpdated on : 10-03-2017 10:52 AM
Finance Minister Arun Jaitley will chair a high-level meeting with Reserve Bank officials tomorrow to address the issue of non-performing assets in the banking sector.


A possible structure of Asset Management company to take over NPAs and enable banks to clean up balance sheets is likely to be drawn up during the meet.

While Chief Economic Advisor Arvind Subramanian had suggested setting up of a bad bank to deal with the problem of non-performing loans, Reserve Bank Deputy Governor Viral Acharya had floated the twin concept of Private Asset Management Company (PAMC) and National Asset Management Company (NAMC) for resolution of stressed assets.

As on September 30, 2016, gross NPAs of public sector banks rose to Rs 6.3 lakh crore as against Rs 5.5 lakh crore at the end of the June quarter.

This works out to an increase of Rs 79,977 crore on a quarter on quarter basis.

Last month, Subramanian had said the idea of setting up a state-owned asset reconstruction company (ARC) or bad bank to deal with mounting NPAs is gaining traction and needs to be created quickly.

The PAMC plan, as suggested by Acharya, could be for sectors such as metals, construction, telecom, and textiles, where the assets will have economic value in the short run.

As per the plan, the banking sector may be asked to restructure about 50 large stressed exposures in these sectors by December 31, 2017.

The NAMC plan could be viable for sectors where the problem is not just of excess capacity but of economically unviable assets in the near term.

(PTI) (PV-10/03)

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