Indian government formulates strategies to resolve bad loans
Panel of bankers comes up with a five-pronged plan
As Indian banks grapple with the mounting problem of bad loans, which as of March 31 stood at over 10 trillion rupees (US$145.6 billion) a panel of public sector bankers have come up with a five-pronged strategy to deal with the issue depending on the size of the stressed asset, Business Standard reports.
The panel believes banks should set up a system to deal with stressed assets below the value of 500 million rupees (US$7.28 million). It stipulates a plan for the resolution of the debt should be arrived at within 90 days of detection of the stressed asset.
For loans between 500 million rupees and 5 billion rupees (US$72.8 million), the lead lender should take charge and devise a resolution plan within 180 days.
For assets worth over 5 billion rupees, asset management companies will be set up through alternative investment funds.
The panel, led by Punjab National Bank Non-Executive Chairman Sunil Mehta, also suggested resolving bad debts under the Insolvency and Bankruptcy Code and setting up a trading platform for assets.
Indian Finance Minister Piyush Goyal is quoted as saying that the recommendations have been accepted by the government.