Quick and decisive action under the plan christened as "Sudarshan Chakra", up by several levels from "Indradhanush" plan of 2015, will strengthen their balance sheets, he said.
"The Indradhanush was a good plan, but to end the Indian story differently, we need soon a much more powerful plan - 'Sudarshan Chakra' - aimed at swiftly, within months if not weeks, for restoring public sector bank health, in current ownership structure or otherwise," Acharya said while delivering the 8th R K Talwar Memorial Lecture here today.
Under the Indradhanush plan, the government had announced to infuse Rs 70,000 crore in state-run banks over four years while they will have to raise a further Rs 1.1 lakh crore from the markets to meet their capital requirement in line with global risk norms, known as Basel-III.
Public sector banks were given Rs 25,000 crore in 2015-16 and 2016-17. Besides, Rs 10,000 crore each would be infused in 2017-18 and 2018-19.
Calling for quick and decisive action, Acharya suggested a slew of measures like approaching the capital markets when the equity inflows are high.
"Can the valuable and sizable deposit franchises be sold off to private capital providers so that they can operate as healthy entities rather than be in the intensive care unit under the RBI's prompt corrective action (PCA)? Can we start with the relatively smaller banks under PCA as test cases for a decisive overhaul?" he wondered.
Adding a tinge of personal touch to illustrate the importance of the subject, he said, "Oft when on my couch I lie in vacant or in pensive mood, the realisation that we have put in place a process that not just addresses the current NPA issues, but is also likely to serve as a blueprint for future resolutions, becomes the bliss of my solitude! A whole ecosystem is evolving around the IBC and the RBI's steps have contributed to this structural reform."
"I smile and rest peacefully at night with this thought...But every few days, I wake up with a sense of restlessness that time is running out; we have created a due process for stressed assets to resolve but there is no concrete plan in place for public sector bank balance-sheets," he added.
"How will they withstand the losses during resolution and yet have enough capital buffers to intermediate well the huge proportion of economy's savings that they receive as deposits; can we end the Indian story differently from that of Japan and Europe?" Acharya said.
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