A worker counts money at a market in Mumbai, India. (Photographer: Adam Ferguson/Bloomberg News)

India Forms Panel To Study Setting Up Asset Reconstruction Company

Finance Minister Piyush Goyal today announced setting up a committee to give recommendations in two weeks on formation of an Asset Reconstruction Company for faster resolution of stressed accounts.

The committee under Sunil Mehta, non-executive chairman of Punjab National Bank, will make recommendations in two weeks on setting up of an ARC for faster resolution of stressed accounts, he told reporters.

Most of the stressed assets have been identified that could fit into the ARC or AMC structure, he said. Banks will also consider having oversight committees with external experts to help faster decision making and resolving stressed accounts in a transparent and speedy manner, added Mehta.

After meeting the heads of state-owned banks, Goyal said that the government “stands solidly behind each of the 21 public sector banks.” He added that discussions during the meeting focused on credit flow and banks devising mechanism to ensure credit flow to good borrowers does not face difficulties.

Risks need to be mitigated to support economy, he said, adding that all bankers wished to set up a mechanism to enable faster resolution of stressed accounts. He added that all vacant positions of PSB heads will be filled in the next 30 days.

Suggestions about strengthening governance process and honest recognition of NPAs or bad loans were discussed at the meeting. Goyal assured that processes will be streamlined with customer interest protected.

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