1. Arun Jaitley cracks whip, says no loan waivers for capitalists

Arun Jaitley cracks whip, says no loan waivers for capitalists

In a blog, the finance minister said the time has come to be apprised of facts in this regard and one must ask at whose directive the loans, which have now turned non-performing assets, were offered between 2008 and 2014 by public sector banks.

By: | New Delhi | Published: November 29, 2017 5:40 AM
Arun Jaitley, Arun Jaitley cracks whip, loan waivers, loan waivers for capitalists, scotching rumours, debts of capitalists, public-sector banks Finance Minister Arun Jaitley (Image: PTI)

The government on Tuesday asserted that it hasn’t waived any loans of big defaulters, scotching rumours that debts of capitalists are being written off by banks. In a blog, finance minister Arun Jaitley said the time has come to be apprised of facts in this regard and one must ask at whose directive the loans, which have now turned non-performing assets (NPAs), were offered between 2008 and 2014 by public-sector banks (PSBs). “Government has not waived any loans of big NPA defaulters …,” Jaitley said. Under the new Insolvency and Bankruptcy Code, cases have been initiated in the National Company Law Tribunal for a timebound recovery from 12 largest defaulters, as recommended by the Reserve Bank of India. These defaulters alone account for non-performing assets (NPAs) worth around Rs 1.75 lakh crore. “The public needs to ask the rumour mongers at whose behest or under whose pressure were such loans disbursed.

They should also be asked that when these debtors delayed in repayment of their loans and interest thereon to public sector banks, what decision was taken by the then government,” the finance minister said. The finance minister said instead of taking firm and bold decision against debtors and defaulters, the then government eased loan classification norms to keep defaulters as non-NPA account holders. He added that the asset quality review (AQR) carried out for clean and fully provisioned balance-sheets in 2015 revealed high NPA. Consequently, loans of about Rs 4,54,466 crore, which were actually fit to be NPAs but were under the carpet, were recognised after intensive scrutiny under the AQR, said Jaitley.

Separately, the finance minister, after launching the Paytm Payments Bank, held that technology has changed the way the banking is done in the country. Digital transaction is fast replacing the need for more cash, thanks to a series of government initiatives to formalise the economy. “We are all realising that convenience, security and even proprietary lies in switchover itself,” he said. With the aim of boosting credit offtake as well as job creation, the government has taken the critical decision of infusing huge capital into state-owned banks, the finance minister said in his blog. Last month, the government announced a massive Rs 2.11 lakh crore capital infusion plan for the PSBs through 2018-19.

“Through capital infusion, banks weakened by NPAs would become strong and become capable of raising adequate capital from the market,” Jaitley said in the blog. However, even this infusion will be tied to strict conditions. The PSBs will have to carry out several reforms so that such situations do not recur, he added. The finance minister asserted that through strong steps taken over the last three years, “not only have the problems received as legacy” been addressed but reforms for rebuilding the strength of PSBs have been boosted. The consolidation in the public-sector banking space to create few strong banks started with the integration of State Bank of India and its associates, and the latest recapitalisation move will strengthen this process.

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