Finance Minister Arun Jaitley: PSU banks need to manage risks better

Written by ENS Economic Bureau | New Delhi | Updated: Aug 22 2014, 11:49am hrs
Arun JaitleyArun Jaitley on Thursday said the government is working to tighten risk management in the banking sector. (Reuters)
With a spate of alleged corruption cases coming to light in public sector banks, finance minister Arun Jaitley on Thursday said the government is working to tighten risk management in the banking sector as well as professionalising their management.

With regard to professionalising the management of banks, we have taken some decisions. We also expect banks to have better risk management, Jaitley said at a function organised by Indian Bank, adding that the department of financial services is working on these issues.

While not referring to any specific instances, he said that some recent incidences have been disturbing. But I only hope that they are a drop in the ocean. We must learn the lessons from such incidents and hope there will be no repetition of them, he stressed.

His comments come in the backdrop of a number of scams in state-owned banks over the past month.

Meanwhile, the finance minister also announced that the revamped financial inclusion plan will be launched on August 28. We will launch on a mission mode, the flagship programme of the government the Jan Dhan Yojana. The Prime Minister will inaugurate it in Delhi, he said.

RBI flags rising NPAs in infra sector

(ENS) The Reserve Bank of India has cautioned the banking sector and borrowers over the rising stress rate of the infrastructure sector which, once much less than the average, is now over twice that of the overall portfolio.

Over a fifth of all infrastructure advances are stressed and in stress tests of credit risk exposure to sectors, infrastructure impacts banks most severely on account of potential losses on future assumed impairments, the RBI said in its Annual Report for 2013-14.

While share of advances to infrastructure continued growing from 13.5 per cent in March 2011 to 14.4 per cent, in March 2014, infrastructure as a share of NPAs, has risen sharply, from 8.4 per cent to 29.2 per cent.