Opinion | Sashakt will not solve the NPA problem

“When I told my doctor that I couldn’t afford the operation, he offered to touch up my X-rays.” This sort of sums up the thrust of the government-appointed Sunil Mehta committee report for yet another structured solution to the non-performing assets plague afflicting our economy. Sensing this in its asset quality reviews, the Reserve Bank of India coerced all banks in June 2017 to move the insolvency courts to resolve their bad loans, and, early this year, dismantled all loan restructuring platforms, such as strategic debt restructuring and the scheme for sustainable structuring of stressed assets, unambiguously leaving the NCLT route as the sole resolution vehicle. Briefly, Sashakt aims to bolster the lending performance of banks through structured and time-bound resolution of stressed assets below ₹ 50 crore within 90 days and those in the range of ₹ 50-500 crore within 180 days. Of course, the thrust of the report is on stressed assets exceeding ₹ 500 crore, where resolution is proposed through an “independent” asset management company. The straitjacketed resolution within 90 days of loans up to ₹ 50 crore and within 180 days for loans exceeding this amount up to ₹ 500 crore runs contrary to recent stringent RBI directives on NPA recognition and is seen as a means of postponing the inevitable.