As part of the proposed five-pronged plan of the Sunil Mehta-panel, the government will set up Independent asset management companies (AMCs) and steering committees for faster resolution of bad loans in the banking system, Finance Minister Piyush Goyal has said.
The panel under the chairmanship of PNB non-executive chairman Sunil Mehta has recommended an asset management company/alternative investment fund (AIF)-led resolution approach to deal with NPA cases of more than Rs 500 crore, media reports quoted Goyal as saying.
There are about 200 accounts, each of which owes more than Rs 500 crore to banks. Their total exposure is about Rs 3 .1 lakh crore, reported PTI.
Giving details, Goyal reportedly said under this approach, independent asset management companies would be set up. AIF would raise funds from institutional investors.
The AMC, to be set up under AIF framework, will become a market maker and thereby ensuring healthy competition, fair price and cash recovery, the minister said.
“The government will not intervene in the resolution process which would be entirely led by banks,” Goyal reportedly said, adding that most of the banks have already expressed their interest in the recommendations.
The committee has also suggested an asset trading platform for both performing and non-performing assets.
The finance minister also said the committee did not recommend setting up a ‘bad bank’ to deal with the mounting NPAs in state-own banks, the PTI report pointed out.
The panel has also suggested a plan for dealing with bad loans up to Rs 50 crore.
Under the SME Resolution Approach (SRA), loans up to Rs 50 crore would be dealt using a template approach supported by a steering committee, the report said.