India mulls experts to deal with banks for resolving burgeoning bad debts

Vastavam web: India has set up a panel of experts to explore mechanisms for resolving the burgeoning bad debts plaguing its financial sector, the interim Finance Minister Piyush Goyal said on Friday.Indian banks, already burdened by a near-record 9.5 trillion rupees ($141 billion) of soured loans as of last year, reported a further rise in bad loans in the March quarter after the Reserve Bank of India (RBI) withdrew half a dozen loan-restructuring schemes and tightened some rules.

The committee is headed by Sunil Mehta non-executive chairman of Punjab National Bank, Goyal told a news conference.“This group will consider whether such an arrangement will be good for the banking system and if such a suggestion is considered advisable it will also consider the modalities by which such an ARC and/or an AMC should be set up,” he said.Goyal said the government was committed to support all state-run banks and to strengthen their operations, after several lenders reported a jump in net losses last month.

“The government stands committed to support all 21 public sector banks,” he said.After the meeting with bankers, Goyal said some lenders might consider creating oversight committees comprising external experts such as retired judges and regulators to help with faster decision making.“The government of India believes that the autonomy of the banks be recognised,” Goyal said, adding the government has not “micromanaged banks”.