Insta
Piyush Goyal (Ramesh Pathania/Mint via Getty Images)
Interim Finance Minister Piyush Goyal has announced that a five-pronged strategy suggested by a committee of bankers was accepted to tackle the bad loans challenge facing public sector banks (PSBs), Bloomberg has reported.
The committee was headed by Punjab National Bank chairman Sunil Mehta. The committee was set up last month to advise the government.
The five-pronged strategy includes:
To implement the strategy, the loans pending with PSB have been classified into three categories. For loans below 50 crore, a resolution plan has to be arrived within 90 days of detection by individual banks. The committee recommends lead lender should take charge and devise a resolution plan within 180 days. For assets over 500 crores, an AMC structure is to be created.
The AMCs are to be formed with equity infusion from banks, foreign funds and infrastructure investment funds. Institutional investors are also allowed to setup AIFs which will fund AMCs. The AMCs, in turn, will buy stressed assets from PSBs.
An independent AMC would be set up, and AIF would raise funds from institutional investors. AMC/AIF will become a market maker and ensure healthy competition, fair price and cash recovery," the Goyal has said.
The plan is expected to address bad loans which are estimated to be 10 lakh crores as on 31 March 2018.
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