What is Project Sashakt and how are banks planning to deal with NPAs? - letsdiskuss
Official Letsdiskuss Logo
Official Letsdiskuss Logo

Language


Rohan Chauhan

Financial analyst (Mudra finance company) | Posted | Share-Market-Finance


What is Project Sashakt and how are banks planning to deal with NPAs?


0
0




Entrepreneur | Posted


According to a report on Quartz, 14 of 21 state-run banks in India has suffered a total loss of Rs 42,043 crore. (Source) And the gross NPA of public sector banks stood at Rs 7.77 lakh crore by the end of December 2017. (Source)


Keeping this situation in mind and few other problems, the introduction of Project Sashakt is a much welcome move. Basically, a committee of bankers, led by the Chairman of Punjab National Bank Sunil Mehta, submitted a report on ways to deal with Non-Performing Assets. Interim Finance Minister Piyush Goyal, on Monday, announced that the government has accepted and approved this report. And they would be moving ahead to implement the actions mapped in the report. 


According to Project Sashakt led by Sunil Mehta Committee, an independent Asset Management Company (AMC) would be formed that would function under a five-pronged strategy to primarily deal with NPA cases of more than Rs 500 crore. Although, it would also deal with loans from Rs 50 crore, and Rs 50-500 crore. 

The report outlines many solutions to address the challenges of stressed accounts, including dealing with them through the inter-creditor arrangement. 

It also recommends ways to attract foreign capital through effective frameworks. Additionally, there are also commendations for the formation of asset trading platform for both performing and non-performing assets. 

In short, the five-pronged strategy includes: 

· SME resolution approach 

· Bank-led resolution approach 

· AMC led resolution approach 

· NCLT/IBC approach 

· Asset-trading platform 

Admittedly, Project Sashakt, led by Sunil Mehta Committee is the right move to tame a critical problem in the banking sector. However, how effective would it be is yet to be seen. After all, we’re a country good at planning but bad in implementation.

Letsdiskuss
(courtesy: Yahoo News)


0
0

Picture of the author