He said the amendments were likely to come in the next session of parliament.Pointing out that this was a necessity in the present circumstances, Dayal said the capital requirement of banks to meet the capital adequacy norms would rise in the days to come, and they would have to raise their resources on their own, as the Government was not in a position to provide money for the purpose. Banks will have to raise new equity to meet their requirements, he added.

Dayal said the Government was also assisting the public-sector banks to offer VRS, so that the cost of operation in the banks could be cut.

He said a comprehensive policy on VRS would bring down costs significantly, which would help the banks to lend money at a lower rate of interest in the days to come.

Interest rates will also correct themselves after the reduction in the cost of operations, he added. The banking secretary, however, pointed out that the government borrowings, which constituted about 60 per cent of total amount, was also one of the main reason for higher lending rates. He said that the current low inflation rate needs to be watched for a certain period till its becomes steady, before going in for a reduction in the interest rate. Dayal said the banks should fully utilise the Employee Stock Option Plan.

He said the Government will amend the Sick Industries Companies Act (Sica) to allow banks to sell their assets to another company as a going concern, help them to recover bad debts. The definition of sick companies will also be changed, he said, adding, this will allow a company to qualify as sick if 50 per cent of its net worth is wiped out.

Under present rules, a company can qualify as sick only after its entire net worth is wiped out.

The Government will also increase the number of Debt Recovery Tribunals (DRTs) from 10 to 15, and that of the Appellate Authority for Industrial and Financial Restructuring (AAIFR) from one to five.

On the construction sector, Dayal said the Government would amend the laws to treat the sector as an industry. This will allow banks to finance the construction segment like any other industrial sector, he said. The Government has also proposed securitising housing loans, Dayal added. He said the working group set up under him to give suggestions on implementing earlier recommendations on banking reforms will give its report by end-December.