While lauding the resolute steps being taken by the government and the Reserve Bank of India to tackle the stressed assets in the banking system, the ASSOCHAM has suggested also creation of Stressed Assets Funds (SAFs) with active participation of the cash rich public sector firms to turn non-performing assets (NPAs) into the performing assets.
The ASSOCHAM suggested creation of some kind of a Stress Asset Fund (SAF) which can help in revival of the assets under high leverage. "Once these assets are brought back to shape, the pay-backs to the SAF can take place. Different forms of the SAFs can be thought of, including some of which can be neutral to creating a hole in the government finances.
"The key would be to have persons of high integrity on these oversight committees, which then should be given all out support from the government to help the lenders resolve the top NPA accounts within a time bound period. What is equally important is that the persons mandated with the task can rest assured that they would be no fear of vigilance bodies after decisions involving some losses for the sake of reviving the stresses assets are taken in good faith," said ASSOCHAM President Mr Sandeep Jajodia.
He said barring very few and exceptional cases, most of the NPAs in stressed sectors like steel, power, telecom or infrastructure, have resulted from adverse business cycles marked by crash in commodity prices , making investments worth several lakhs of crores of rupees unviable. "This is a world wide phenomenon".
"Some of the cash rich public sector companies can be encouraged to participate either in the SAFs or take over some of the assets where the present promoter wants to exit. With the green shoots in several of the sectors, this could even be an opportunity for the government or special purpose vehicles to buy assets at much lower valuations", the chamber said.