NPAs on the decline, credit growth rising, says Arun Jaitley after key review meet with PSBs

Finance minister Arun Jaitley on Tuesday said bad loans for public sector banks are on a decline and that the economy is passing through a phase of good growth.

“Banks are very confident that under the circumstances they will maintain liquidity for the various sections of the economy, the liquidity which is required,” Jaitley said after reviewing the annual performance of public sector banks. The FM also inaugurated a website of public sector banks — psbloansin59minutes.com — where MSMEs can avail loan of up to Rs 1 crore in less than an hour.

Banking activity is bound to pick up as consumption has moved up and growth figures are encouraging, he said. Jaitley also launched the Financial Inclusion Index. Financial services secretary Rajiv Kumar in a presentation said banks expect cash recoveries of Rs 1.80 lakh crore in 2018-19. PSBs will also be able to monetise non-core assets worth Rs 18,665 crore, he said. “There is equal focus on arresting fresh slippages,” he added.

Earlier in the day, Jaitley told chief executives and senior officials of state-run financial institutions that banks must strive to be always seen as institutions of clean and prudent lending.

Jaitley exhorted the banks to ensure all steps at their end for clean lending and effective action in cases of fraud and wilful default to justify the trust reposed in banks, the finance ministry said in a statement. He observed that formalisation of Indian economy through the Insolvency and Bankruptcy Code (IBC), GST, demonetisation and digital payments have enabled better assessment of financial capacity and risks.

Coupled with inclusive growth through massive financial inclusion, this has unlocked purchasing power which will drive India’s growth,” Jaitley said, adding that this should help India sustain a growth rate of around 8%. The FM flagged the need to revisit efficacy of the Debts Recovery Tribunal mechanism, particularly in view of long lead times in disposal of cases. “Amendment of IBC to debar wilful defaulters has had the unintended positive consequence of defaulting borrowers stepping forward to make payment to participate in the resolution process,” he said.

The perception regarding the health of PSBs has become more positive as banks have posted positive results in terms of resolution, recovery, provisioning and credit growth, Jaitley said.

Source- Economic Times