The decision was taken at a high-level meeting chaired by RBI deputy governors SP Talwar and YV Reddy. The meet was attended by top officials from State Bank of India, chairmen of Bank of Baroda, Central Bank of India, Allahabad Bank and executive director of Canara Bank along with chairmen of Housing Development Finance Corporation, Unit Trust of India, Industrial Development Bank of India, Industrial Finance Corporation of India and officials from ICICI.

According to a bank chairman, who attended the meeting, banks and FIs have agreed to join hands to create a common charge on current and fixed assets created out of their combined lending. Under the arrangement, banks and institutions will hold proportionate chargeon new assets, depending on the relative quantums of their loan exposures. A similar arrangement is also being worked out on cash flows of corporates as well.

Sources said that the coordinating panel will work like a standing advisory committee to recommend common measures to tackle NPAs, sources who attended the meeting said. "The RBI will be formulating modalities while individual banks and FI will formulate specific guidelines for bringing down the NPAs," a source who attended the meeting said.

Sources said that with the setting up of the panel, information about sticky accounts can be exchanged and whether anymore funds should be lent to the borrower can be decided. A decision whether to go in for a concerted compromise settlements will also be decided by the RBI panel so that the account can be prevented from going bad.

Representatives of banks and institutions have had a series of meetings to sort out the issue and the outcome of these meetings is: both the financial intermediaries should holdpari passu charge on current as well as fixed assets, taking a giant step towards universal banking.

From the banks' and institutional point of view, it will simplify the loan documentation process and deny the borrower a chance to play one financial intermediary against another. In the case of sticky loans, banks and institutions can take joint action and hasten the legal process by virtue of holding common charge on all assets.