AMC, steering panels to be set up to tackle bad loans
Independent asset management companies (AMCs) and steering committees will be set up for faster resolution of bad loans in the banking system, Finance Minister Piyush Goyal said as the government accepted fivepronged plan of the Sunil Mehta-panel.
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, Goyal told reporters here.
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.
Giving details, Goyal 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 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 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 panel has recommended that the resolution should be non-discretionary and completed in a time bound manner within 90 days.