New Delhi: Worried over mounting bad loans, the Bank Board Bureau (BBB) is working out an "intermediate mechanism" to ensure early resolution of the problem and also to provide comfort to the bank management with regard to settlement of dues.


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"We are putting in place an intermediate mechanism which will analyse some of the processes which would be triggered to settle the NPAs that the banks are carrying on their balance sheets," Vinod Rai, chairman of BBB told reporters on the sidelines of an industry event.


That intermediate mechanism will provide a certain degree of comfort to the management of the bank -- chief executive or the executive director -- he said, adding there are two kind of issues, one is process of resolution, the other is the pricing at which the resolution takes place.


"Pricing is the commercial judgement of the institution. And I don't think it would be fair to have an outside agency take that decision," he said.


When asked by when it would be in place, Rai said, "It's all being thought out. We have not crystallised our thinking. But there will be an intermediate mechanism. It will give a lot of comfort to bank decision makers and it will be very credible."


The entire thing will be rolled out in a fortnight, he said without giving much details of it.


Asked if it will be under the Bureau, he said it will be outside BBB and would be in domain of banks.


Last week Rai had stressed that the bad loans situations was not alarming and said all public-sector banks have got their strategies in place to tackle the stressed asset woes.


The gross non-performing assets (NPAs) of PSBs rose from Rs 2,67,065 lakh crore in March 2015 to Rs 3,61,731 lakh crore in December 2015.


Punjab National Bank, earlier this week, reported a record high quarterly loss by any public sector lender at Rs 5,367 crore for the fourth quarter ended March 31, 2016.


Before this, several banks including Bank of Baroda, Syndicate Bank, UCO Bank and Allahabad Bank reported loss in their quarterly balance sheet due to bad loans pressure.


Asked if holding company for public sector banks are being considered, he said, it would be much later.


"Our priorities are the vacancies and lending process. Holding company and consolidation will come later," he said.


The process has started, Rai said adding, "hopefully you will have more of them and create some large entities."


Earlier this week, top state-run lender SBI proposed merger of its five associate banks and newly created Bharatiya Mahila Bank (BMB) with itself, a move that will create Rs 37-lakh crore banking behemoth with over 50 crore customers.


The Bureau was constituted earlier this year to help the government select heads of public sector banks and financial institutions and assist banks in developing strategies with regard to capital-raising and consolidation.