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Seeking more empowerment and protection while tackling bad loans, the heads of public sector banks on Wednesday met officials from the CBI, Central Vigilance Commission and the Reserve Bank to discuss the concerns which arise out of settlement of debt revamp schemes.
Since settlement of non-performing asset (NPA) accounts usually happens at a steep discount, bankers are reluctant to pursue this route, fearing scrutiny by investigative agencies later.
“The agenda was to discuss the implementation of the scheme announced by the RBI and how to go about it,” Dena Bank chairman and managing director and Indian Banks’ Association (IBA) chairman Ashwani Kumar told reporters after the meeting here.
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UCO Bank managing director and CEO R K Takker said, “It was a co-ordination meeting between all the institutions… CBI, CVC, RBI and banks.” CBI director Anil Sinha, CVC chief K V Chowdary, senior officials of the Reserve Bank and heads of public sector banks attended the meeting.
On Monday, the RBI had issued guidelines on a Scheme for Sustainable Structuring of Stressed Assets (S4A) to further strengthen the lenders’ ability to deal with stressed assets and to put real assets back on track by providing an avenue for reworking the financial structure of entities facing genuine difficulties.
Kumar said the banks presented issues related to the scheme to the RBI and other agencies. “We discussed the concerns which arise out of such one-time settlement (OTS) schemes and what is the requirement or the process which we would follow, so that everybody is on the same page.”
Bank of Maharashtra chairman and managing director S Muhnot said the IBA has been working on an oversight committee on NPA management and that was one of the solutions that came up in Wednesday’s meeting. Asked whether banks were afraid of witch hunting by investigative agencies while trying to dispose off bad loans under debt recast norms, Kumar said, “Banks don’t fear any witch hunting and there is no witch hunting. Only thing is that everybody is on the same page when some process is on.”
“One of the key considerations was that in situations like these, banks should be empowered and consequently should be protected so that they can bring about commercially prudent settlements,” finance minister Arun Jaitley had said after meeting the heads of PSU banks last week.