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Report: India public sector banks gear up to set up asset management company

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Report: India public sector banks gear up to set up asset management company

Indian public sector banks are gearing up to establish an asset management company for faster resolution of bad loans worth more than 5 billion rupees, with State Bank of India likely to register a firm by the end of September, The Economic Times reported Sept. 4, citing a senior banker.

The publication reported that domestic financial institutions and asset reconstruction companies have shown interest in the proposal. Private companies like BlackRock Inc. and Brookfield have also held discussions about the proposed company, said the banker.

The report came after India's government in June announced the formation of a committee that would examine the setting up of an asset management company for faster resolution of stressed assets involving multiple public sector banks. The committee, which is headed by Punjab National Bank Chairman Sunil Mehta, has already filed a report to the government. It also included an intercreditor agreement to resolve bad loans. About 32 banks had already signed the intercreditor agreement.

As of Sept. 4, US$1 was equivalent to 71.47 Indian rupees.