RBI top brass discusses NPA issues with bankers, ARCs

Mumbai: Reserve Bank Governor Raghuram Rajan and other top RBI officials met bankers, representatives of asset reconstruction companies and NBFCs Monday to discuss effectiveness of distressed assets resolution mechanism and sought their suggestions to make it more efficient.

Besides Rajan, Deputy Governors R Gandhi and S S Mundra, senior officials from regulation and supervision departments discussed the current challenges with regard to the management of stressed assets in the banks' books and the implementation of steps taken by the regulator in this regard.

"The meeting reviewed the functioning of the Joint Lenders' Forum (JLF) mechanism, Flexible Restructuring of Long Term Project Loans, Strategic Debt Restructuring (SDR) Scheme and regulations on sale of assets by banks to ARCs," RBI said in a statement.

RBI had, however, called heads and senior officials of select private and public sector banks only.

Those present included State Bank of India MD B Sriram, IDBI Bank Deputy Managing Director B K Batra, PNB MD and CEO Usha Ananthasubramanian, ICICI Bank MD & CEO Chanda Kochhar, HDFC Bank Deputy Managing Director Paresh Sukthankar, Kotak Mahindra Bank chief Uday Kotak, Bank of India Executive

Director R A Sankara Narayanan.

Besides bankers, Arcil Managing Director and CEO Vinayak Bahuguna, Reliance Commercial Finance CEO K V Srinivasan and Edelweiss Group Chairman Rashesh Shah were also present.

"The discussions revolved around asset sales to ARCs (asset reconstruction companies), the effectiveness of SDR and 5:25 refinance scheme. RBI sought suggestions to effectively deal with the issue and said they are going to take them forward," BoI's Narayanan told reporters after the meet.

HDFC Bank's Sukthankar said there were discussions on the practical difficulties faced in implementation of SDR and 5:25 refinancing plan.

"Different players have made various suggestions in terms of making them (SDR, 5:25 scheme and JLF) more effective in terms of implementations," he said.

Edelweiss' Shah said RBI is committed to ensuring that in the next two years, the NPA issues are completely resolved.

The central bank also flagged the issue of capitalisation of ARCs. "One of the discussions was how to capitalise the ARCs, how to raise more capital from international sources and how to ensure that there is lot more risk capital available which can take these assets and recover them," Shah added.