Panel to mull ARC for stressed assets

Panel to mull ARC for stressed assets

NPA, ARC

News:

1 The finance ministry has set up a committee to examine the possibility of setting up an asset reconstruction company or an asset management company.

Important Facts:

1. The committee will be headed by Punjab National Bank’s non-executive Sunil Mehta.

The committee include 2 more member

• Bank of Baroda’s MD and CEO P.S. Jayakumar
• One member to be nominated from State Bank of India

1. The Asset reconstruction company or an asset management company would enable the fast track resolution of stressed assets.
2. The committee is expected to submit its report within two weeks.
3. Issues

• Improving credit flow.
• Vacant executive positions in public sector banks.
• At present, five state-run banks do not have a chief executive and several executive directors’ positions are also vacant.

1. The government has allocated ₹65,000 crore for capital infusion into 21 public sector banks during the current financial year.
2. The Rating agency Moody has pointed out that the government’s recapitalization plan for the 21 public sector banks will take care of the provisioning requirement for bad loans but will not be sufficient to support credit growth.