NPA level manageable 8212; Verma

quot;As someone who has been in the Indian banking system for more than 40 years, my own opinion is that the NPA situation in India is totally manageable,quot; he said.

Verma said the banks could be brought back to health with some changes in the country8217;s legal system. quot;If we can effect those changes, and we are quite hopeful those changes will be effected in the short run, it should be possible to manage the situation without any serious difficulty,quot; he said.

Banks have for long demanded better foreclosure laws and setting up of debt recovery tribunals in the country to recover their funds locked up in dudassets.

Verma ruled out suggestions to close down three ailing state-owned banks and said these banks could be put back on rails with some help. A central bank panel headed by him on Monday advocated sharp staff cutbacks and wage freezes among the tough measures needed to rehabilitate the three weakest of India8217;s 27 state-run banks 8211; Indian Bank, United Bank of India and UCO Bank.

Verma said closing these banks was not a quot;worthwhilequot; option. quot;8230;Because these banks have wide network and offer services in different areas, the main point that the group has seen is that these competitive efficiencies can be restored and as long as we are satisfied that there competitive efficiencies can be restored, it would not be worthwhile closing them,quot; he said.

The panel headed by him has prescribed a 55 billion Rupees1.26 billion restructuring plan for these banks but on condition these banks cut their costs. The government has spent over 200 billion Rupees 4.6billion since the early 1990s recapitalisingstate-run banks.

Verma said the only solution lay in cutting staff costs which were about 70-80 per cent of the total expenses of these banks. quot;The other costs that are there are really essential, 100percent essential and there is very little possibility of expecting any reduction therein,quot; he said.

quot;The other alternative is to increase income,quot; he said adding that this was difficult to achieve. quot;Therefore, at this point of time there is no choice whatsoever in the opinion of the group, but to attack their staff costs.quot;

The former SBI chairman said along with the three weak banks, other state-run banks were also showing signs of sickness. quot;But the group feels that it is possible for these three banks as well as the others to be restored back to health, once we take some hard options and really work on that,quot; he said.