1. Arun Jaitley, bank chiefs discuss NPA cleanup; FM says states must bear farm loan waiver costs

Arun Jaitley, bank chiefs discuss NPA cleanup; FM says states must bear farm loan waiver costs

Finance Minister Arun Jaitley acknowledged that there is a challenge to credit growth and that a speedy resolution for all pending NPA cases is needed. He added that states offering farm loan waivers ‘must generate funds from their own resources'.

By: | Published: June 12, 2017 2:25 PM
Jaitley met with the heads of Public Sector Banks (PSBs) today to discuss how to tackle the growing menace of NPAs. (Image: PTI)

After reviewing the steps Public Sector Banks (PSBs) are taking to expedite the recovery of bad loans, Finance Minister Arun Jaitley acknowledged that there’s challenge to credit growth as well as the need for a speedy resolution for all pending NPA cases. Jaitley is reported to have discussed NPA resolution, finances of banks, review of financial inclusion with heads of public banks.

“There is a challenge with regard to credit growth. Already about 81 cases filed under Bankruptcy Code. Also, RBI is at advanced stage of preparing list of debtors where resolution required,” Jaitley said.

Jaitley met with the heads of Public Sector Banks (PSBs) today to discuss how to tackle the growing menace of NPAs. The rampant adverse effect of NPAs is evident from a fact disclosed by Jaitley himself, that the PSBs made stable operating profit of Rs 1.50 lakh crore in 2016-17, but only a paltry net profit of Rs 574 crore after provisioning for their NPAs.

Nifty PSU Bank index, which was under pressure since the beginning of trade today, slipped further after this meeting and recorded its biggest intraday percent loss of 1.72% since May 29, while the Nifty Bank index slipped as much as 0.82%. At 1:55 p.m., was down over 1.62% at 3,461.95 points with all the constituent scrips trading lower, while the Nifty Bank index was down 0.74% at 23,516.20 points.

Among public sector banks, Oriental Bank of Commerce was down over 4% at Rs 146.00, Union Bank of India was down over 3.6% at Rs 152.20, Canara Bank was down over 3.4% at Rs 348.15, Bank of Baroda was down 3.20% at Rs 168.15, Bank of India was down over 3% at Rs 138.95 and Punjab National Bank was down 2.7% at Rs 148.00.

You may also like to watch:

Today’s meeting was the first after last month’s promulgation of the ordinance amending the Banking Regulation Act, 1949, which gave RBI enhanced powers to deal with NPA by directing banks to start insolvency proceedings against defaulters.

Jaitley had said the ordinance empowered the Reserve Bank to issue “directions to any banking company or banking companies to initiate insolvency resolution process in respect of a default under the provisions of the Insolvency and Bankruptcy Code (IBC), 2016”, the report had added.

On the sensitive issue of farm loan waivers, Jaitley said that states offering such waivers ‘must generate funds from their own resources’, the report added. Jaitley’s comment comes after the Maharashtra government announced a total loan waiver for farmers in the state.

In RBI’s recent Monetary Policy Review, RBI Governor Urjit Patel had said that farm loan waiver is a path that needs to be tread carefully, while RBI’s policy statement said that farm loan waivers have raised the risk of fiscal slippages.

According to reports, the Maharashtra government will have to make provisions for Rs 1.14 lakh crore to waive off entire loan burden of all 1.36 crore farmers in the state. However, if the Maharashtra government decides to waive off the loan of marginal and small farmers only, then the burden it will have to bear would amount to Rs 30,000 crore only.

  1. A
    asok
    Jun 12, 2017 at 4:19 pm
    Budget is made for estimating financial gains and loss.A shopkeeper will shut his business if there is loss for one year.Why every year due to unbalanced expenditure public money is wasted.Same perso at home makes budget which is always in profit,but when he goes to office to make Govt. budget he makes loss budget.Is the mind same or different for doing same same job at home and at office? Is there any punishment for thisdouble standards? Ther is no Do,s and Dont,s displa on the walls for these persns.How will thecountryrun/ because for a single work money is involved in any work.Work is never done free.
    Reply
  2. A
    asok
    Jun 12, 2017 at 4:09 pm
    NPA is pure day time bank dacoity and NOT Business.How by emotionally manipulating rules money gifted will be recovered to bank chest? Will bankers write off loan given from their personal account? Never.Then how the same person being given ry to do a work ,manipulates and allow money theft? Still they travel in aeroplanes and enjoy life? How are they different from a thief?
    Reply

Go to Top