‘Intermediate mechanism’ to tackle bad loans: BBB chairman Vinod Rai

New Delhi, May 20 (IANS) An “intermediate mechanism” will be in place by June 15 for resolution of non-performing assets (NPAs) of banks, Bank Board Bureau chairman Vinod Rai said here on Friday.

“We are putting in place an intermediate mechanism which will analyse some of the processes… which will be triggered to settle the NPAs which the banks are carrying in their balance sheets,” Rai said at the fifth banking and finance summit 2016, organised by the Confederation of Indian Industry (CII).

“The intermediate mechanism should be in place in a fortnight or maximum three weeks from now. It will be in place by June 15,” he added.

Rai’s announcement came at a time when public sector banks are reporting massive losses in Q4 of financial year 2015-16, with Punjab National Bank reporting a net loss of Rs.5,367 crore and the highest ever NPAs.

“It is the stressed asset that is a priority today because lending activity has taken a setback. We need to help banks to overcome the phenomenon. We have had discussions with every public sector bank, they want to take the decision expeditiously,” he said.

The intermediate mechanism will be in the domain of banks and outside the BBB, he said.

Refusing to divulge any details further, he only said the mechanism will provide a certain degree of comfort to the management of banks.

The mechanism will only deal with the “process of resolution” and not “pricing”, he said adding that it will not be fair for an outside agency to take that decision.

Rai also said that the Reserve Bank of India (RBI) is preparing guidelines to resolve the issues on joint lending.

A separate holding company will be set up to transfer government shareholding in public sector banks, he added.

–IANS

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