PSUs to manage PSB's stressed assets
25 October 2016
The Narendra Modi government, which is trying to unburden the government of top-heavy businesses through divestment of government stake, is in a strange situation now burdening itself with stressed private sector assets.
With state-run banks finding no takers for their stressed collateral assets in sectors like steel, power and shipyards, the government has now decided to rope in PSUs to manage these stressed private sector assets in power, steel and shipyards.
The centre is looking to public sector enterprises to tackle the problem of managing these assets, at least in the interim, until a buyer can be found for these crucial infrastructure sector assets.
Accordingly, banks will, in some cases, take over stressed assets and hand these over to established public sector undertakings for an interim period to nurse them back to health.
A management team of established PSUs in certain sectors will operate some of the plants and facilities of the stressed assets, finance minister Arun Jaitley said on Monday.
Briefing reporters after a meeting with bank officials at North Block on Monday, Jaitley said banks would invoke their contract, convert debt to equity and appoint a management team.
''The concerned secretaries have been asked to coordinate with the banks. The measure will be taken immediately,'' Jaitley said.
Today, one of the problems is when stressed assets are put out (for auction), there are no takers. ''Now takers will be created,'' Jaitley noted.
Monday's meeting was attended by officials of the Department of Financial Services, Department of Economic Affairs, and the Prime Minister's Office as well as chairpersons of important banks.
Representatives of three departments - power, steel and shipping - also attended the meeting as well as chairman and managing directors (CMDs) of three important PSUs - NTPC, SAIL and Cochin Shipyard.
Estimates put non-performing loans in power sector at about Rs4,00,00 crore and stressed assets in steel sector at about Rs3,50,000 crore..
The meeting also discussed stressed loans in sectors other than steel, power and shipbuilding.