Vinod Rai suggests more powers for oversight committee to solve PSBs’ bad loan problem

The Banks Board Bureau (BBB) headed by former comptroller and auditor-general Vinod Rai is reported to have sought an expansion of the ambit of Oversight Committee to provide guidance under other available mechanisms.

Various measures have been suggested to ease banks' bad loans problem, which include deep restructuring, creation of a joint lenders forum (JLR) and strategic debt restructuring (SDR).

The BBB chief has written to finance minister Arun Jaitley and the Prime Minister's Office pointing to the tardy progress made by state-owned lenders in resolving the issue of non-performing assets.

Bad loans of state-owned banks rose by about Rs1,00,000 crore during April-December 2016-17, the bulk of which are accounted for by the infrastructure sector - power, steel, roads - and textiles.

Gross NPAs of public sector banks increased to Rs6,06,911 crore while total stressed assets (gross non-performing assets and restructured standard advances) of scheduled commercial banks stood at Rs9,64,000 crore as of 31 December 2016.

In his letter addressed to principal secretary in the PMO, Nripendra Misra, the BBB chief has suggested a roadmap to get banks out of the NPA problem, official sources said.

Meanwhile finance minister Arun Jaitley last week held a high level meeting with senior officials, including RBI Governor Urjit Patel and two deputy governors S S Mundra and Viral V Acharya to deliberate on the ways to resolve stressed assets in the banking sector.

The oversight committee was set up by the Reserve Bank of India to look into process of the cases referred to it by the different banks.

Jaitley said last week that the depending on the response and its performance, the government will consider multiplication of such committees.

BBB, which was set up as an advisory body to recommend on the appointment of directors at PSBs and on ways to raise funds and bank mergers, including acquisitions, had since expanded its role to also help banks in their capital raising plans and develop business strategies.