FM Piyush Goyal said that if a borrower does not get its dues from entities like discoms, it should not lead banks to classify that borrower automatically as a defaulter.
Finance minister Piyush Goyal on Friday, advocating easier norms for recognition of NPAs, came out in support of some borrowers who are not able to repay their loans in 90 days.
In a post-budget interaction with the industry members, Goyal said that a borrower cannot be classified as defaulter in case companies like discoms fail to pay their bills on time, PTI reported.
The minister citing a case wherein the discom didn’t pay the amount it owed to a power producer said the latter does not become a defaulter here.
“Law cannot be blind, wherein in 90 days arithmetically it becomes a non-performing asset (NPA). We will also discuss this and we hope to resolve it quickly,” said Goyal.
The Reserve Bank, on Thursday, had already said that it won’t look again at a controversial circular about recognizing bad assets as default on the first-day itself and discarding loan recast schemes that were issued on February 12 last year.
The finance minister said the government could ensure that SEBI takes out a proposal to disclose every default by listed companies. The minister signaled of similar measures to be taken up with RBI too.
“It is worth discussing with the RBI that if a payment is overdue and discom is not paying its bill, then we will have to think about NCLT and NPA,” said Goyal.
Power companies have sought special treatment from the Supreme Court for the power sector in terms of classification of NPAs.
Goyal further called for requirement of specialised development finance institutions (DFIs) such as IDBI, IFCI and ICICI, saying that the asset-liability mismatch results in difficulties for the banking system to support the infrastructure sector.
The government is trying to get the remaining eight banks out of the restrictive prompt corrective action (PCA) framework, he said.
CII president Rakesh Bharti Mittal requested Goyal’s intervention to set up DFIs to finance infrastructure. He said the budget balances between maintaining fiscal discipline and welfare of vulnerable sections of society.