Without naming Kingfisher Airlines chief Vijay Mallya, Finance minister Arun Jaitley told a gathering of top bankers and chief executives, that the government will do whatever it takes to ensure that bank loans are repaid by defaulters. While speaking at the FE best banks awards, Jaitley said that the government had already taken action in sectors like steel and construction, but legal action will be taken if required in the case of wilful defaulters evading Indian authorities.
“If you (wilful defaulters) think you can just physically swim across the shores and avoid paying debts, then I don’t think the system will entirely ignore this,” he said.
Arun Jaitley added that, with the national investment and infrastructure fund (NIIF) chief likely to take over in the first week of September, he would take a decision on whether a stressed asset fund – which could buy over bad loans of banks – would be created.
“We have already had arrangements being entered into between the NIIF and various potential contributors to the NIIF. Even across the world, there is a great amount of enthusiasm,” Jaitley said.
At a time when the labour union have threatened a strike, Jaitley did not make a statement on the specifics of privatisation but said that while the government was shutting down loss-making PSUs, decisions on others such as BSNL would have to come from the respective ministries. He added that instead of selling an entire company, it might be possible to merely segregate assets and divest these so as to realise their value.
“One option is to segregate the assets and divest only an asset so that you can have recycling of the assets itself in order to have more value for the government and that value itself can be used for some other purpose,” Jaitley said.
The finance minister stressed the importance of monitoring a contract by putting in a mechanism to give early warning on potential problems. “We have just notified a hike in minimum wages, and if this affects the viability of a project, the promoter can come to this board and ask for a solution before the loan turns bad,” he explained.
Rather than blindly focusing on privatisation as a mantra, Jaitley said it was important to ensure the public sector managers – including banks – were given sufficient autonomy to operate without the dreaded CAG, CBI and CVC getting after them. While this has been done through the Banks Board Bureau (BBB) in the case of banks, the changes and the early passage of the prevention of corruption act would also insulate them.
Speaking at the FE Best Banks awards,Viveck Goenka, Chairman, Indian Express Group, said the awards have become the benchmark in the industry. “We are here to celebrate the finest in banking,” he noted, adding that there is disruptive technology challenging the banking landscape at present.