Assocham suggests measures to boost economy, lower bank NPAs

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Industry group Assocham has suggested measures such as kick-starting the infrastructure sector, developing a strong corporate bond market and a single-window clearance mechanism to revive the economy and lower bad loans of banks.

"The huge portfolio of restructured assets and non-performing assets (NPAs) has been exerting huge pressure on the country's financial system," Assocham said in a letter with a set of recommendations to Banking Secretary G S Sandhu.

It is imperative to bring down NPAs to the minimum, Assocham said.

"The infrastructure sector suffers from gestation lags, constraints in mobilisation of financial resources, land acquisition issues and hurdles in obtaining statutory clearances. These need to be sorted out," it said.

The industry chamber said the rising number of corporate debt restructuring cases are an indication of the growing difficulties faced by companies in meeting their financial obligations.

"Development of a strong and vibrant corporate bond market could help in widening the scope of infrastructure funding. Similarly, given the huge investment requirement, providing an environment that is attractive to foreign investors also needs to be developed," Assocham suggested.

The chamber also suggested putting in place a single-window clearance system with specific guidelines and time-bound approvals.

The government has asked banks to make all-out efforts to recover NPAs and reduce the level of bad loans.

NPAs of state-owned banks rose 28.5 per cent to Rs 2.36 lakh crore in September last year from Rs 1.83 lakh crore in March 2013, according to the finance ministry.

Pointing out that the industry has been hit by cheap imports of finished steel from countries such as Japan and South Korea, with which India has bilateral trade agreements, Assocham advocated a periodical review of such accords.

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