(Corrects panel head in paragraph 3)
By Abhirup Roy
MUMBAI (Reuters) - India's interim Finance Minister Piyush Goyal said on Friday that the government was committed to support all state-run banks and strengthen their operations, after several lenders reported a jump in net losses last month.
He said a panel headed by Punjab National Bank Non-Executive Chairman Sunil Mehta would examine whether banks needed to set up an asset reconstruction company for faster resolution of stressed lenders.
Indian banks, already burdened by a near-record 9.5 trillion rupees ($141 billion) of soured loans as of last year, reported a further rise in bad loans in the March quarter after the central bank withdrew half a dozen loan-restructuring schemes and tightened some rules.
The 21 banks majority-owned by the Indian government, which account for two-thirds of banking assets in the country, hold close to 90 percent of soured loans.
Goyal said the government and the central bank would make all efforts to bring state banks into a "good shape" so that they could once again become "an engine of economic growth".
"The government of India believes that the autonomy of the banks be recognised," Goyal said, adding the government has not "micromanaged banks".
On potential mergers, he said the banks would have to take a final call on consolidation based on their experiences and needs.
Addressing allegations of mismanagement at the private lender ICICI Bank Ltd, Goyal said there was no cause for concern for stakeholders.
"ICICI Bank is a good bank. It has very robust processes and there is no cause for concern for any of the stakeholders of ICICI Bank," he said.
The bank has set up an inquiry into allegations raised by an anonymous whistleblower that Kochhar favoured Videocon Group in its lending practices.
Videocon's founders had an investment in a renewable energy company founded by Kochhar's husband. The bank rejected the accusations of nepotism in March and said the board had "full confidence and reposes full faith" in Kochhar.
Goyal said the bank's internal and external inquiry committees would look into the allegations. ($1 = 67.5000 Indian rupees)
(Additional reporting by Malini Menon, Nidhi Verma in New Delhi; Writing by Manoj Kumar; Editing by Alex Richardson)
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)