• The Sunil Mehta Committee, set up to look into the faster resolution of stressed assets, has recommended the creation of an asset management company for the resolution of stressed loans worth more than Rs.500 crore

• The government on Monday announced a banks-led, five-pronged, comprehensive plan - Sashakt - for the resolution of stressed assets with public-sector banks (PSBs), including creation of one or more widely held asset management companies for loans above Rs 500 crore.

• The committee had also laid out a plan to resolve SME loans within 90 days.

• Resolution should be non­discretionary, non­discriminatory and completed within a time-­bound manner within 90 days.

• The committee had also recommended the setting up of a “robust monitoring and review mechanism.

• “The key difficulty is in arriving at a consensus approach among a large number of lenders", Finance Minister said.

• For mid-sized bad assets ( between Rs 50 crore and Rs 500 crore) — which are of similar aggregate size as of the large ones — there will be a purely banks-led resolution approach under which they would enter into an inter-creditor agreement to authorise the lead bank to implement it in 180 days.

• The lead bank will then prepare a plan and may involve turnaround specialists and industry experts in its implementation.

• If 66 per cent of the lenders approve a plan, it could be worked out, akin to a similar threshold for insolvency proceedings under the Insolvency and Bankrutpcy Code.

• In case the lead bank fails to complete the resolution process in 180 days, the asset would be referred to the National Company Law Tribunal for insolvency proceedings.

• Gross non-performing assets (NPAs) with the banking system hit as high as Rs 8.99 lakh crore as of December 2017, or 10.11 per cent of total advances.

• Around 85 per cent of these bad loans were with the PSBs.

• As many as 11 of the 21 PSBs are under the central bank’s prompt corrective action (PCA) framework.

The Hindu, Indian Express.