Finance Minister announces committee to set up Asset Reconstruction Co

After meeting the heads of state-owned banks, Goyal said the government “stands solidly behind each of the 21 public sector banks (PSBs)”. The committee under Sunil Mehta, non-executive chairman of PNB, will make recommendations in two weeks on setting up of an Asset Reconstruction Company or Asset Management Company for faster resolution of stressed accounts, he told reporters here. Most of the stressed assets have been identified that could fit into the ARC or AMC structure, he said.

Also, banks will consider having oversight committees with external experts to help faster decision making and resolving stressed accounts in a transparent and speedy manner. Goyal said discussions during the meeting focused on credit flow and banks devising mechanism to ensure credit flow to good borrowers should not face difficulties. Risks need to be mitigated to support economy, he said, adding that all bankers wished to set up a mechanism to enable faster resolution of stressed accounts.

He also said all vacant positions of PSB heads will be filled in the next 30 days. 

Suggestions about strengthening governance process and honest recognition of NPAs or bad loans were discussed at the meeting, he said. He assured that processes will be streamlined and customer interest protected.