Bank chiefs meet with RBI, CBI, CVC, discuss NPAs

Representatives of public sector banks on Wednesday met officials from the Central Bureau of Investigation, the Central Vigilance Commission and the Reserve Bank of India to discuss the problem of non-performing assets (NPAs) in the backdrop of the new debt recast norms.

"The agenda was to discuss the implementation of the scheme (debt recast norms) announced (by 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 in Mumbai.

UCO Bank managing director and chief executive R K Takker said, "It was a coordination meeting between all the institutions - CBI, CVC, RBI and banks."

Director of the CBI Anil Sinha, CVC chief K V Chowdary, senior officials of the Reserve Bank of India and head of all the public sector banks were in attendance.

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 Indian Banks' Association has been working on an oversight committee on NPA management and that was one of the solutions that came forward in Wednesday's meeting.

Asked whether banks were afraid of witch hunting by investigative agencies while trying to dispose of bad loans under debt recast norms, Kumar replied in the negative.

"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," he said.

Under the new debt recast norms, banks are required to maintain a minimum of 20-per cent provision on the total loan outstanding or 40 per cent of the unsustainable portion of the debt at the time of S4A.

Banks have to provide 100 per cent of the expected losses on unsustainable portion in excess of the minimum requirements prescribed - that is 20 per cent of total or 40 per cent of unsustainable part - over a period of four quarters.