New Delhi: After his meeting with 21 CEOs of Public sector banks (PSBs), Finance Minister Arun Jaitley on Tuesday said that impact of the Insolvency and Bankruptcy Code (IBC) was “clearly visible” as non-performing assets (NPAs) are on the decline while recoveries of bad loans have picked up considerably
“Last several years have been challenging for public sector banks as large amount of lending was held up in NPAs,” Arun Jaitley said.
As per Ministry of Finance, issues like credit growth, recovery, financial inclusion and reforms were discussed Jaitley and the bank chiefs.
The meeting took place in the backdrop of the ‘Alternative Mechanism’ (AM) deciding to merge three public sector banks – Bank of Baroda, Vijaya Bank and Dena Bank – with a view to create a global-size lender which would be stronger and sustainable.
Jaitley seeks 8% growth
- During the meet, Jaitley asked public sector banks to take “effective action” in cases of fraud and wilful loan defaults.
- Reviewing the performance of state-owned lenders, he exuded confidence that formalisation of the economy would help India achieve sustainable growth of 8 per cent.
- “FM, Shri @arunjaitley exhorted the banks to ensure all steps at their end to ensure clean lending & effective action in cases of fraud & wilful default, to justify the trust reposed in banks. Banks must strive to be seen always as institutions of clean & prudent lending,” the Finance Ministry said in a tweet.
- In another tweet by the ministry, Jaitley said that formalisation of the Indian economy coupled with inclusive growth through massive financial inclusion has unlocked purchasing power, which would drive India’s growth.
- “This should help India sustain a growth rate of around 8 per cent,” he was quoted as saying in a tweet.
- Jaitley, who also holds the portfolio of Corporate Affairs, said that formalisation of the economy through the Insolvency and Bankruptcy Code (IBC), GST, demonetisation and digital payments have enabled better assessment of financial capacity and risks.
Recovery of bad loans
- Banks have stepped up efforts as far as recovery of bad loans is concerned.
- Lenders have made recovery of 36,551 crore in the first quarter of the current fiscal. This is 49 per cent higher than the same quarter of the last fiscal. During 2017-18, banks recovered Rs 74,562 crore.