Interim Finance Minister Piyush Goyal on Tuesday said that the public sector banks (PSBs) have decided to support genuine borrowers. After the meeting with PSBs, Piyush Goyal told reporters that all 21 PSBs have decided to extend their support to companies with a borrowing between Rs 200 and Rs 2,000 crore. The details of who will be considered ‘genuine’ borrowers and what kind of support will be given to them were not shared.
“The banks will have creditors agreement amongst themselves to overcome the problems of consortium lending. The State Bank of India has suggested to set up a committee to determine the specific needs of banks,” Piyush Goyal said. Piyush Goyal also said that the government is open to the question of giving more powers to the Reserve Bank for effectively regulating public sector banks. “Public money is extremely safe in PSU banks. Government stands behind them 100 per cent,” Goyal said. However, he stated that he was not “sure” as to how safe the public money is with private companies which have huge income tax dues. He said the frauds were perpetrated by private companies and not the PSBs.
In reference to a recent suggestion by RBI Governor Urjit Patel that the central bank lacked powers to effectively deal with the PSBs, Goyal said RBI has powers, but if additional powers are needed the government was open to the idea. He also said that PSBs would support credit needs of genuine companies, and focus on MSME sector. Various investigating agencies are probing the over USD 2 billion fraud allegedly committed by diamond jeweller Nirav Modi and his associates. Several other scams too have surfaced in the recent past involving PSBs.