The Telegraph
Sunday , July 13 , 2014
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Govt gears up to curb NPA

Financial services secretary G.S. Sandhu (left) and finance secretary Arvind Mayaram in New Delhi on Saturday. (PTI)

New Delhi, July 12: The government today said it planned to bring down non-performing assets (NPAs) of state-run banks, particularly those of the power and road sectors, and fast forward consolidation of banks.

“We are working on a model to address the stressed assets concerning the power and road sectors and hope to find a solution in these major areas,” G.S. Sandhu, financial services secretary, said while addressing Ficci’s national executive committee meeting here today.

Sandhu said the government would dilute its equity in banks to 51 per cent to meet the required capital target of Rs 2.4 lakh crore under the Basel III norms. This will be equal to about 15-20 per cent of the current level of advances by the banking sector.

“We have a time frame of 4-5 years and we are framing an action plan to raise this order of funds,” he said.

Sandhu told Ficci members that NPA management was being tightened and the budget proposals reflected that resolve. He said NPAs of banks had risen considerably during the last three years mainly because of the weak performance of the economy. Budget 2014-15 has proposed early resolution of the problem through debt recovery tribunals (DRT).

The finance ministry is also tightening rules for faster recovery of debt and for this it will make changes in the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (Sarfaesi) and DRT acts.

Sandhu said the ministry was also considering the feasibility of setting up of a National Asset Management Company, a detailed representation for which has been made by Ficci.