As the banking sector grapples with mounting bad loans, Ficci has suggested that the government establish a National Asset Management Company (NAMCO) for one-time resolution of large NPAs. "The proposed time-bound and close-ended framework NAMCO would require Government sponsorship but no capital injection or guarantees.
Ministry of Finance can encourage public sector banks (PSBs) to take up to 49.9% equity in NAMCO and the balance equity will be sourced from private sector banks and other private financial institutions. "NAMCO shall focus on rehabilitation of large-scale NPAs (non-performing assets), restructured loans and other potential stressed assets, mainly in the infrastructure sector," Ficci said. The recommendations submitted by the industry chamber to the Finance Ministry and Department of Industrial Policy and Promotion recently, are part of a paper titled 'Executive Actions to enable Make in India'. Major state-owned banks in the country including SBI have been reeling under NPAs leading to erosion of profits on account of higher provisioning for bad loans in the third quarter of the current fiscal.