In view of the severity of the bad loans problem, banks are expecting specific measures, including setting up of a ‘Bad Bank’ for taking over these loans, revamping debt recovery tribunals, and a fund for reviving stalled infrastructure projects in the upcoming Union Budget to revive their fortunes.

According to the latest bi-annual survey conducted by the Federation of Indian Chambers of Commerce and Industry and Indian Banks’ Association, bankers’ have suggested that a National Asset Management Company (NAMCO) or a Bad Bank be established to take over stressed loans from the banks and either sell them off or revive them.

Besides, bankers’ also want debt recovery tribunals (DRTs) to be revamped so that the recovery process gathers pace.

As the situation stands now, there is no time/urgency to dispose of (recovery) cases that have been pending for a long time in DRTs. Borrowers can easily get stay orders, said a banker.

Revival of stalled projects

The survey said bankers want a fund to be set up to aid revival of stalled infrastructure projects.

Major reasons for stalled projects (mainly infrastructure) in the case of public sector include lack of environment clearances, budget constraints and land acquisition. In the case of the private sector, the main reasons for stalled projects (manufacturing) include lack of environment clearances, unfavourable market conditions, and lack of promoter interest.

Offshore infra bonds

The survey found that continued thrust on infrastructure sector by the government is reflected in the rising demand from the sector.

A majority (65 per cent) of the respondents reported high demand for long-term credit from infrastructure sector during July-December 2015. In the previous round of the survey too, most (76 per cent) banks had reported high demand from this sector.