There is a proposal to form such an entity, for which public sector banks can jointly put in capital, sources said.
"We have asked banks to prepare some modalities for setting up of this company, which could look at the stressed asset issue holistically, including taking over non-performing assets (NPAs) and revival of sick units," sources said, adding that the proposal was part of a presentation made to the Finance Minister by the Financial Services Department.
As per the proposal, it can act as an aggregator of NPAs and clear such assets quickly.
Presently, there are 14 asset reconstruction companies - of which four are very active - which can take over part of a stressed account.
Once set up, the proposed National Asset Management Company can pick up large stressed assets entirely from a consortium instead of the normal practice of a partial takeover.
Stressed assets have been on the rise due to the economic slowdown and the delay in infrastructure projects.
The gross NPAs of banks increased to 4.4 per cent of advances at the end of December from 3.84 per cent at the end of March 2013.
Bad loans of PSU banks rose 28.5 per cent to Rs 1.83 lakh crore in March 2013 over the preceding September. The top 30 NPAs of state-owned banks account for 40.2 per cent of their gross bad loans.
The Finance Ministry has asked public sector banks to act tough in case of wilful defaulters and has suggested that they go in for a change of management of defaulting companies.
There is also a proposal to finance the acquisition of bad assets. In such cases, bank finance would be made available to a financially strong buyer to acquire stressed assets or a sick company.
This facility is presently not available and the Reserve Bank of India is looking into the matter.