Letter to BS: It is important to reshuffle management of distressed firms

Retired officials are the cause of NPAs in most PSBs as they do not have the required capabilities and talent to turn their fate around

Many recommendations and solutions are being discussed for the resolution of the large number of non-performing assets (NPAs) related issues at public sector banks (PSBs). One issue that is important but is being missed by all is the action required to improve the performance of the stressed companies. It is important to reshuffle and improve the management of the distressed companies. I suggest a governance committee be formed. It is important to depute professionals with relevant experience and required expertise. This committee should be handed over to the management of the distressed company.

Another important point is that during conversion of the debt to equity of the companies that are not able to repay their loan, PSBs normally appoint its retired senior level officials as directors. These retired officials are the cause of NPAs in most companies as they do not have the required capabilities and talent to turn the fate of the companies around. The stressed companies need a revamped board and thus should appoint professionals in place of promoters.

Further, I suggest stern punishment be introduced for wrongdoing--it would be a deterrent against committing fraud. There has to be a fresh thought process.

P K Chaudhuri  

Noida