NEW DELHI:Dealing with the non-performing assets (NPAs) of banks is a challenging task even though NPAs showed a declining trend in the last quarter of the current financial year, Finance Minister Arun Jaitley said on Wednesday. The government is taking sector-specific measures to deal with the problem of NPAs specifically in the resolution of large debts, Jaitley said while making his opening remarks at the first meeting of the consultative committee attached to the finance ministry.
According to members of the committee, apart from recovery proceedings, criminal action must be taken against large wilful defaulters and their photographs be published. Suggestions were also made to allow the state governments concerned to take part in the auction of stressed assets. It was also suggested by various members that since asset reconstruction companies (ARCs) are in the private sector and their performance is not up to the mark in many cases, close monitoring of the operations of ARCs may be done through stringent regulations especially in the wake of decision to allow 100 per cent FDI in the ARCs through the automatic route.
It was also suggested that to improve the confidence of bank officials, the gross NPA norm may be fixed at 9-10 per cent and not counting the asset as NPA if it has been restructured. Some members suggested the government establish an ‘Asset Rehabilitation Agency’ to consider those NPAs where sector-specific reforms do not work. The Committee asked the government to explore long-term debt market for financing NPAs and setting up of a ‘special bank’ where NPAs of public-sector banks can be transferred.
Jaitley said the steel sector is on the path to recovery and steps have been taken to help other stressed sectors like infrastructure, power and textile.