Banks' NPA Woes: Government To Form Panel To Set Up Asset Reconstruction Company
The government has given two weeks for a new panel to report on the feasibility of 'bad bank' or an asset restructuring/ management company to deal with the problem of rising non-performing assets (NPAs) for Public Sector Unit (PSU) banks in the country. The possibility of a bad bank has been debated for quite some time now but this is the first step towards actually considering it.
A committee has been formed under the chairmanship of Sunil Mehta, non-executive chairman of Punjab National Bank, which over the next two weeks will come out with their recommendations on a suggestion that was deliberated in great detail among the bankers, who believed that it may be worth considering to set up an asset reconstruction company and or an asset management company for faster resolution of stressed assets which have multiple banks involved in these accounts, and often which get delayed in resolution and cause loss of value to the banking system as a whole, said Union Finance Minister Piyush Goyal on Friday.
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"This group will consider whether such an arrangement will be good for the banking system and if any such suggestion is considered as possible, they will also consider the modalities by which such an ARC or AMC should be set up," Mr Goyal added.
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The panel will be headed by Sunil Mehta the chief of PNB, which recently reported record losses of 13,000 crores and also saw the Nirav Modi- Mehul Choksi scam that runs into nearly Rs 14,000 crore.
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