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Govt to work with RBI in solving bad loans

The government intends to work closely with the Reserve Bank of India to take care of issues that have come up relating to bad loans. Stating this, minister of state for finance Jayant Sinha said the government’s participation will be there in the resolution of bad loans as initiated by RBI which has told the public sector banks to clear up their balance sheets by 2017. Sinha said at the second edition of Gyan Sangam, an annual retreat of bankers as far as the review of stressed assets is concerned, it is a continuous process that could last at least till March 2017 for both recognition and classification. The other side of it is resolution. It is a question of how the bad loans are recognized, classified and made provisions for, he said. The finance ministry and the RBI have already strengthened the mechanism through which banks can resolve assets even on an interim basis. Even the bankruptcy code is in the Parliament, he added. While the government has allocated Rs 25,000 crore capital infusion in PSBs in FY17, Sinha said that the government will provide more if necessary. To decide which bank needs how much capital, the government will take a three-pronged approach, he said.

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