Jaitley, RBI Governor discuss banks’ bad loans

New delhi: Finance Minister Arun Jaitley met with Reserve Bank of India (RBI) Governor Urjit Patel and other senior officials here on Friday to discuss the issue of banks’ non-performing assets (NPAs) or bad loans, sources said.

“Lot of options were discussed for early resolution of stressed assets. RBI made some suggestions and these will be taken forward to and be given a concrete shape,” the sources told reporters after the meeting.

The meeting discussed the idea of a Private Asset Management Company (PAMC), as well as a National Asset Management Company (NAMC), to tackle the bad loans issue proposed recently by RBI Deputy Governor Viral Acharya.

As per the plan, the banking sector could be asked to restructure about 50 large stressed assets in sectors like metals, construction, telecom and textiles, by December 31, 2017.

According to sources, the meeting also discussed the concept of a “bad bank” that has been proposed by Chief Economic Advisor Arvind Subramanian, who was also present at Friday’s meeting.

“We will have to weigh the pros and cons well before using tax payers’ money to set up a bad bank,” they said.

The magnitude of the problem can be guaged from the NPA figures of state-run banks, which at the end of the current fiscal’s second quarter that ended in September, rose to Rs 6.3 lakh crore, as compared to Rs 5.5 lakh crore at the end of the first quarter.

The meeting was also attended by RBI Deputy Governor S.S. Mundra, Principal Economic Advisor Sanjiv Sanyal, Financial Services Secretary Anjuly Chib Duggal and Corporate Affairs Secretary Tapan Ray.