Finance Minister Arun Jaitley is scheduled to meet the heads of the Public Sector Banks (PSBs) on Monday to discuss the current situation of non-performing assets (NPAs) and the measures being taken to recover voluminous bad loans worth over Rs six lakh crore. In addition to this, the delegation is also slated to deliberate on the performance of public sector banks, record the amount of stressed assets and measures implemented to tally the balance sheets of banks. The Finance Minister will also take up issues like cyber security, digitisation of transactions and the role of banks in the roll out of the forthcoming Goods and Services Tax (GST) Bill on July 1. Earlier in May, President Pranab Mukherjee approved a government ordinance to empower the Reserve Bank of India (RBI) to act against on NPAs.
To this regard, Jaitley said it was necessary to empower the RBI in relation to specific stressed assets, since it was doubtful that whether the language of Section 35 A of the Banking Regulation Act covered the respective empowerments. “It was necessary to empower RBI in this direction. The ordinance passed by the Honorable President seeks to incorporate issuances of Government of India authorising the RBI to initiate the insolvency and bankruptcy proceedings in relation to any stressed assets,” he said.
The ordinance will give greater powers to the RBI to tackle mounting bad loans, according to an official in the Finance Ministry aware of the development. Currently, the PSBs are being faced with toxic loans of Rs 6.06 lakh crore during April-December 2016-17, as a result of which gross NPAs were capped at Rs 5.02 lakh crore at the end of March 2016, as opposed to Rs 2.67 lakh crore at the end of March 2015.