The Finance Ministry has asked public sector banks (PSBs) to constitute a board panel to monitor the progress of loan recoveries as bad loans have increased in last few months.

The committee will monitor the recoveries regularly and will have to submit the report monthly to the board. The board panel will comprise of the Chairman and Managing Director, Government nominee and Executive directors.

Bad Loans at Public sector banks have increased by 28 per cent or by Rs 31, 276 crore in the last six months which ended on September 30 to Rs 1,43,765 crore against Rs 1, 12,489 crore as on March end.

There are total 26 public sector banks in the country, majority of them are owned by Union Government, including the five associate banks of State Bank of India.

Corporates and micro, medium and small enterprises are falling behind on loan repayments which have resulted in increases of bad loans due to economic slowdown.

As per the Finance Minister's provisional figures, bad loans of PSBs rose to 4.01 per cent of total loan as on September-end against 3.03 per cent for previous year.