"There were some suggestions on setting up of National Asset Management Company," Financial Services Secretary G S Sandhu said after the pre-budget meeting with heads of banks and financial institutions with the Finance Minister here.
It will take over large non-performing assets of banks and help in revive companies ridden with bad debts.
"Various suggestions have been given. We will examine those suggestions and then we will see what all to be included in the budget," he said.
The gross Non-Performing Assets of public sector banks rose to Rs 2.03 lakh crore at the end of September 2013, from Rs 1.55 lakh crore on 31 March, 2013.
The NPAs or bad loans of the domestic banking system were 4.4 per cent of gross advances at the end of December 2013.
"There was discussion on NPA. There was also proposal for setting up of National Asset Management Company for improving the performance of DRTs (debt recovery tribunals) to collect loans," HSBC India country head Naina Lal Kidwai said after two and half hour long meeting.
Some suggestions were also made for strengthening of present SARFAESI Act (The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act) to ensure fast recovery of bad loans, she said.
Public sector banks requested government for capital infusion and long-term instrument for financing infrastructure sector.
Bankers also requested for issue of tax free bonds for development of infrastructure sector.
"There were suggestion on recapitalisation of banks, financing of infrastructure. All the public sector banks need capital. There were issues about infrastructure lending because that is the need of the day," Central Bank of India Chairman and Managing Director Rajiv Rishi said.
Banks and insurance companies also sought tax benefit for their products.
Kotak Mahindra Bank managing director Uday Kotak said the government should consider listing of insurance behemoth LIC over the next few years.
"Over the next few yeas the government should seriously consider listing of LIC. The kind of money government can raise by listing LIC is significant it can fund funding needs of public sector banks as well as fiscal deficit," he said.