New Delhi: To deal with non performing assets (NPAs) of banks, the Centre on Monday unveiled “SASHAKT” which proposes to set up independent Asset Management Companies (AMCs) to bid for stressed assets with loans over Rs 500 crore.
To resolve loans in the range of Rs 50 to Rs 500 crore, 180 days would be provided under the Bank-led resolution approach (BLRA) mechanism.
Under the plan, a ‘lead bank’ will be appointed and consortium of banks will sign an inter-creditor agreement to authorise the ‘lead bank’ to implement a resolution plan in 180 days. The lead bank would then prepare a resolution plan including empanelling turnaround specialists and experts for operational turnaround of the asset.
The plan should be approved by lenders holding atleast 66 per cent debt. Once the resolution plan is approved, lead bank would be responsible to execute the plan. In case the lead bank is unable to complete the resolution process within 180 days, the asset would move to NCLT. Bank exposure to these category of loans is Rs 3.1 lakh crore.
For loans above Rs 500 crore, an independent AMC would be set-up to bid for stress assets through auction. All investors will be eligible to bid for these stress assets so that the process is competitive and transparent.
The AMC will be set up under the Alternative Investment Fund (AIF) framework. The AIF would raise funds from institutional investors and banks will have an option to invest if they wish to participate in the upside. The AMC/AIF will conduct operational turnaround of the asset by itself or by engaging with an external party
Mr Goyal said consolidation of stressed assets under AMC is for better and faster decision making. This will free up management enabling them to focus on credit growth. There will be zero capital from the government in the proposed structure. There are about 200 accounts, each of which owes more than Rs 500 crore to banks. Their total exposure is about Rs 3.1 lakh crore.
The finance minister also said the committee did not recommend setting up a ‘bad bank’ to deal with the mounting NPAs in state-run banks. Mr Goyal said the recommendations of the committee are compliant with extant regulations and aim operational turnaround to retain value of assets created for national benefit.
