FinMin, RBI officials and bank heads to discuss NPA woes this week

As indicated by Finance Minister Arun Jaitley, there could be an announcement on a scheme for resolution of non-performing assets (NPA). The scheme envisages a specialised mechanism for handling larger debt accounts which are plaguing the banking sector.

A high profile meeting between Finance Ministry, bank heads and Reserve Bank of India (RBI) representatives is scheduled this week in New Delhi to deliberate on several proposals to handle larger debt-laden accounts, sources told CNBC-TV18.

The proposals include two-pronged approach.

First, a mechanism for taking tough decisions like haircuts in NPA resolution and on the other hand how to revive some of the companies. Second, there could be a proposal for banks to write-off the unsustainable portion of debt.

Jaitley had last week had said that the Finance Ministry and the RBI are working on a resolution mechanism which will put pressure on borrowers to settle dues.

"You see, the amounts are large, but the amounts are restricted. It's not that hundreds and thousands of businesses have created this problem. The problem of big NPA is confined essentially to 30-40, at best 50 companies, and therefore, those 40-50 accounts need to be resolved," Jaitley had said.