PSUs to be roped in to manage stressed assets in power, steel and shipyards: Jaitley

The Centre seems to have zeroed in on a new solution to tackle the issue of stressed assets in power, steel and shipyards — all crucial infrastructure sectors.

It has now decided to allow, in some cases, banks to take over some stressed assets and hand these over to established public sector undertakings for an interim period. A management team of established PSUs in certain sectors will operate some of the plants and facilities of the stressed assets.

Briefing reporters after an over two-hour long meeting at North Block on Monday, Finance Minister Arun Jaitley said banks would invoke their contract, convert debt to equity and appoint a management team. “The concerned secretaries have been asked to coordinate with the banks. The measure will be taken immediately,” Jaitley said.

Today, one of the problems is when stressed assets are put out (for auction), there are no takers. “Now takers will be created,” Jaitley noted. Monday’s meeting was attended by officers of the Department of Financial Services, Department of Economic Affairs, and the Prime Minister’s Office as well as chairpersons of important banks.

Representatives of three departments — power, steel and shipping — also attended the meeting as well as Chairman and Managing Directors (CMDs) of three important PSUs: NTPC, SAIL and Cochin Shipyard.

Ashwani Kumar, Chairman and Managing Director, Dena Bank, said the meeting saw discussions around power, steel and shipyards. The extent of non-performing loans in power sector is estimated at about Rs. 4 lakh crore and about Rs. 3.5 lakh crore in steel.

Kumar said several possible solutions were discussed. “There cannot be one straitjacket answer to a stressed asset situation. Every asset has to be dealt differently,” he told BusinessLine .

The bankers present for the meeting included SBI Chairperson Arundhati Bhattacharya, ICICI Bank’s Managing Director & Chief Executive Officer Chanda Kochhar and Indian Banks Association (IBA) Chairman Rajeev Rishi.

Rishi is currently Chairman and Managing Director of Central Bank of India. Today, one of the problems is when stressed assets are put out (for auction), there are no takers. “Now takers will be created,” said Jaitley.