Our objective is not to be theoretical but to be pragmatic, even while subjecting the system to increasing discipline and transparency. The good news is that banks are getting into the spirit of the cleanup, and pursuing reluctant promoters to take the necessary steps to rehabilitate projects. Indebted promoters are being forced to sell assets to repay lenders.
We will shortly license a number of new Asset Reconstruction Companies (ARCs) to provide a deeper market for stressed assets. We are also working on a framework to enhance efficiency and transparency of price discovery in sale of stressed assets by banks to ARCs. Bank investors, after initially getting alarmed by the size of the disclosures, have bid up PSB bank shares.