Rajan said banks have been given more powers and flexibility to deal with the bad loans, which have crossed 6 percent as of June quarter.

The gross NPA of the public sector banks rose to 6.03 percent as of June 2015 from 5.20 percent in March 2015.

"We hope that over the span of next year... say by March 2017, a full clean-up will have been done by banks... the idea is to put the real assets back on track with whatever needs to be done," Rajan told reporters at the post-policy briefing here.

"Our next step is to make sure that what should be classified as 'A' is classified as 'A' and not 'B', and we are in constant dialogue with banks. We are also looking at how some of these existing facilities are used to make sure that we are not kicking the can down the road," Rajan further said.

Click here for more related news

Latest News  from Business News Desk