Indian Bank Sets Up Committee To Clear Compromise Proposals

Indian Bank has set up a four-member committee to clear compromise proposals with defaulters and recover the non-perfroming assets.

The move is an outcome of the bankers meeting with finance minister P Chidambaram, where it was decided to form a committee to remove the fear psychosis amongst bankers.

After the raids on bank officials both thecredit and compromise decisions were put on hold. The result was that none of the bankers used to take credit decisions or enter into compromise settlements leading to a fall in the recovery non-performing assets. This in turn affected the income of banks.Indian Bank is the first bank to have established the settlement advisory committee for recovery of non-performing assets. With a committee taking a decision, none of the officers are expected to be hounded in case something goes wrong in the future.

At the meeting held between the finance minister and chief executives of public sector banks on December 9, the idea to set up settlement committees by some of the banks for considering compromise proposals and thereby speed up the process of NPA recovery was mooted.

Indian Banks board of directors cleared the formation of the committee at their meeting on December 27, 1996, according to S Rajagopal, chairman and managing director, Indian Bank.

The committee is headed by a retired high court judge, a retired top banker and two serving general managers of the bank in charge of the recovery protfolio as its members. The committee, which will meet four times a month and with more frequency if warranted, will consider compromise proposals beyond a specified cut off amount. It will take into account the various factors attendent on each compromise proposal and make its recommendations to the banks board.

This will be one more avenue for the bank to recover its non-performing assets in an expeditious manner. The faster recovery will result in increase in its operating and net profit, and a faster trunaround of the bank. The committe began functioning on January 1, 1997.