A leading industry body on Sunday advocated the formation of 'Stressed Assets Funds' (SAFs) to revive non-performing assets (NPAs) in the banking system.
The formation of SAFs will complement the recent steps taken by the government and the Reserve Bank of India (RBI) to tackle stressed assets, the Associated Chambers of Commerce of India (Assocham) said in a statement here.
The industry body elaborated that SAFs should be created through active participation of cash rich public sector firms to revive assets under high leverage.
"Some of the cash rich public sector companies can be encouraged to participate either in the SAFs or take over some of the assets where the present promoter wants to exit," Assocham said.
"With the green shoots in several of the sectors, this could even be an opportunity for the government or Special Purpose Vehicles to buy assets at much lower valuations."
"Once these assets are brought back to shape, the paybacks to the SAF can take place. Different forms of the SAFs can be thought of, including some of which can be neutral to creating a hole in the government finances," the statement elaborated.