The Narendra Modi government on Tuesday said that the debt recovery in the financial year 2018-19 is expected to be Rs 1.8 lakh crore from both Insolvency and Bankruptcy Code (IBC) and non-IBC route. Addressing a press conference after the annual review meeting of the Public Sector Banks (PSBs), Finance Minister Arun Jaitley said that the country is on the right track for overcoming the “legacy issue” of the non-performing assets (NPAs).
The finance minister reiterated that many defaulters are paying up their dues in order to escape the IBC process and losing control over their companies. Arun Jaitley said that as recoveries picked in last few months, it resulted in some PSBs posting profit. He said the in the last several years had been challenging for public sector banks as a large amount of lending was held up in NPAs.
But after the Insolvency and Bankruptcy Code (IBC) came into force, which calls for an auction of assets of loan defaulting entities, recoveries have picked up. Recoveries are better, the lending ability of banks is much better and to top it all credit growth has significantly moved upwards, he said.
“We are passing through a phase of good growth as far as the economy is concerned. Consumption has moved up, and therefore the banking activity is bound to pick up,” he said. Financial Services Secretary Rajeev Kumar said banks expect to recover Rs 1.8 lakh crore through IBC and other routes during the current fiscal. The review meeting Tuesday discussed credit growth and asset quality, he said.
The focus should now be on arresting fresh slippages, he said adding close to Rs 18,000 crore worth of non-core assets will be sold by PSBs this financial year.