"I have spoken to RBI governor Bimal Jalan and finance secretary Vijay Kelkar about the concept. Foreign institutional investors (FIIs) are also showing interest (in the project)," Vaghul told The Financial Express.

Explaining the novel concept of the "deal structuring company", Vaghul said: "It is not going to be a typical company. We will depend on FIIs to buy sticky assets of banks and institutions at a discount on a deal-by-deal basis. At the second stage, we will employ consultants who will restructure the defaulting companies to help them repay the debts. It can be a recast of the debt or even mergers. If the need arises, we can also press for a change in management."

Vaghul has discussed the idea with corporates, banks and financial institutions. "Individually banks andinstitutions have been trying to recover sticky loans by approaching debt-recovery tribunals or the Board for Industrial & Financial Reconstruction. What we need is to form a common approach. We must restructure the corporates to recover sticky assets," the ICICI chairman said.

However, he was quick to point out that the initiative was taken by him as an individual and not as the chairman of the term-lending institution.

The success of the project, according to him, depends on the involvement of three groups -- FIIs, eminent persons in the financial sector and consultants.

"The FIIs were not very forthcoming till recently. However, the attitude has changed now. I am getting positive response (from FIIs)," he said. Vaghul has also discussed the concept with M Narasimham, the architect of financial-sector reforms in the country, and economist Ashok Ganguly. "A large group of consultants -- young and bright professionals -- who have been rendered jobless with so many firms closing down can take up successfee-based assignments at the asset-reconstruction company," he said.

The focus of the project will be corporate restructuring. "We will explore all possibilities -- starting from debt restructing to mergers, acquisitions and change of managements," he said.

"We have studied the global models of asset-reconstruction companies. For instance, in Thailand the government itself has set up the company. Morgan Stanley has also been buying sticky assets there at a massive discount. Then, there is the Korean model. I am working on a model suitable in the Indian context," Vaghul said.

The Narasimham panel on financial-sector reforms has made a strong pitch for asset-reconstruction companies to buy out sticky loans of weak banks. The finance ministry has in principle accepted the idea but no ARC has yet been set up. The plan is to float ARCs in different regions by roping in a clutch of banks and institutions which will contribute to the equity capital of the company. However, Vaghul's model of ARC is verydifferent from that of suggested by the Narasimham panel.