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Finance Ministry Considering Plan to Form Company to Take Over Bad Loans

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The Finance Ministry is considering a proposal to set up a National Asset Management Company that may act as a nodal agency for taking over bad loans of banks and help revive sick units.

There is a proposal to form such an entity, for which public sector banks can jointly put in capital, sources said.
“We have asked banks to prepare some modalities for setting up of this company, which could look at the stressed asset issue holistically, including taking over non-performing assets (NPAs) and revival of sick units,” sources said, adding that the proposal was part of a presentation made to the Finance Minister by the Financial Services Department.

As per the proposal, it can act as an aggregator of NPAs and clear such assets quickly.

Presently, there are 14 asset reconstruction companies — of which four are very active — which can take over part of a stressed account.