Arun Jaitley meets PSB heads; wants to empower banks amidst NPA crisis: 5 key things FM said

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Updated: June 6, 2016 3:12:16 PM

Finance Minister Arun Jaitley on Monday met CEOs of public sector banks to discuss various key challenges facing the banking sector.

Arun Jaitley“I had a meeting with PSB heads and we discussed various suggestions to empower banks,” FM Jaitley said. (PTI Photo)

Finance Minister Arun Jaitley on Monday met CEOs of public sector banks to discuss various key challenges facing the banking sector including growing non-performing assets, a day before RBI Governor Raghuram Rajan takes a call on key rates in the the monetary policy.

“I had a meeting with PSB heads and we discussed various suggestions to empower banks,” FM Jaitley said. “The key discussion topics were credit flow, NPA position and banks expansion,” he said.

Jaitley said that cumulative losses of Rs 18,000 crore suffered by state-owned banks last fiscal were mainly on account of higher provisioning for bad loans.

Public sector banks (PSBs) actually made operating profits of Rs 1.40 lakh crore in 2015-16, he said, indicating that their performance was not as bad as being projected.

Here are some of the key points that FM Jaitley made:

1) The government is fully committed to supporting banks; Insolvency and Bankruptcy Code will become operational very soon.

2) Overall operational profits of PSBs last year was quite significant. PSU banks declared net loss last year due to high provisioning. The overall operational profit of the PSBs last year was quite significant. It was in the access of 1.40 lakh crore… It is on account of the provisioning that overall the PSBs declared a net loss of about Rs 18,000 crore and a significant amount of provisioning having been made in the last two quarters of the fiscal

3) Discussed Progress Of UDAY scheme. UDAY scheme has been reasonably successful

4) Government firmly believes that the NPA situation has arisen on account of certain sectoral debts

5) No discussion took place on bank recapitalisation in today’s meeting. The government has already committed Rs 25,000 crore capital, we are willing to do more.

On Sunday, Jaitley said government has sufficiently empowered the banks to recover their dues but added that they will have to maintain their credit lending facility so that lending for growth continues. “Banks must also now start supporting growth which is extremely important,” he said.

On the RBI monetary policy review, Jaitley said, “It’s an important function of the RBI. We do not comment on it before the RBI announces the policy.

At the same time, he said, “Of course the economy is becoming stronger and wherever the gaps are, our effort now is to bridge them and achieve further growth.

(With inputs from PTI)

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