Recovery of bad loans is on the top of the government's agenda before going ahead with the consolidation of public sector lenders, Banks Board Bureau chairman Vinod Rai said.
"Recovery is absolutely on top of the agenda so that the lending process can start again. Just now banks are engaged in resolution of their stressed assets. So what we are proposing to do is to resolve that (bad loans issues) quickly first because we do not want to saddle banks with greater issues," Rai told reporters on the sidelines of 22nd Lalit Doshi memorial lecture.
The gross non performing assets of scheduled commercial banks rose to 7.6 percent in March 2016 from 5.1 percent in September 2015.
The consolidation of banks is not a small issue and it requires a huge amount of human resources, Rai said.
Government has said that it would push for consolidation of public sector banks once they are recapitalised and strengthened.
It has given in-principle approval to merger of five SBI associate banks and Bhartiya Mahila Bank with State Bank of India.
SBI has five associate banks -- State Bank of Bikaner and Jaipur, State Bank of Travancore, State Bank of Patiala, State Bank of Mysore and State Bank of Hyderabad. State Bank of Patiala and State Bank of Hyderabad are unlisted.
The Bureau has been set up by the government to advise it on top-level appointments at PSBs and ways to address bad loans problem, among other issues.
Talking about reports on a proposal given by BBB to the finance ministry for allowing public sector entities to buy in assets of stressed companies, Rai said lots of discussions have taken place.
"The entire idea is how to resolve the stressed asset issue. So lots of discussions are taking place, some of these things will fall into place very soon. Government will take up some of these ideas," he added.
About selection of managing director and CEO for two state-run banks -- Indian Overseas Bank and United Bank of India -- which are lying vacant, he said the work is in progress.
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