Union Finance Minister Arun Jaitley on Saturday said that poor performance by private investors and banks still remains a challenge for the Indian economy. “Despite Foreign Direct Investment (FDI) coming to India in large numbers, things are not working forcefully — investment in domestic industry is not satisfactory level. The condition is related to banks,” Jaitley told DD News in an interview here.
The Minister said with the Goods and Services Tax (GST) heading towards the July 1 rollout and global growth showing positive trends, these two challenges have been overcome. “But there is a third challenge — to increase investment cycle of domestic industry, which also has a relation to banking sector performance,” Jaitley said.
He earlier said that banks necessarily need to be in a robust position to support growth and if they have unacceptably high levels of non-performing assets (NPAs), it hinders their capacity. “The banks have to recover their bad loans to boost private investment, as domestic private investment needs to pick up. Efficiency has to be brought in so as to recover the money from defaulters,” he had said.
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Jaitley added that a defaulting litigant hurts the lending environment in India.The government on May 5 promulgated an ordinance to empower the Reserve Bank of India (RBI) in a big way to deal with the crisis of huge bad loans of state-run banks.
Jaitley had earlier said that a number of steps will be taken to revitalise public sector banks, including those relating to sale of assets, closure of non-profitable branches and reduction of overheads when memorandums of understanding (MoUs) are signed with them for recapitalisation.
He had said there is a list of stressed assets which the RBI would look into.