Jaitley to meet PSU bank chiefs on June 12 to review NPA situation

First meeting after promulgation of ordinance amending the Banking Regulation Act

New Delhi, May 26:  

Finance Minister Arun Jaitley is slated to meet heads of PSU banks on June 12 to discuss the issue of non-performing assets (NPAs) and the steps being taken by them to expedite recovery of bad loans that have hit high levels.

Apart from the financial performance review, the meeting will take stock of the status of stressed assets and various measures taken to clean up the balance sheets of banks so that they can start lending, sources said.

Non-performing assets (NPAs) of public sector banks (PSBs) have gone past the ₹6-lakh crore mark, the bulk of which are in sectors such as power, steel, road infrastructure and textiles.

The meeting will discuss the current status of stressed assets and pending cases before the Joint Lenders’ Forum (JLF), the sources said.

Besides, various measures taken by banks on NPA recovery, the turnaround plan and ambitious targets of various lenders will also be discussed.

With the stock prices on the mend, the meeting will also discuss ways in which PSBs can tap the markets to raise funds and ease the pressure on the exchequer to pump in capital as per the Indradhanush plan.

According to the scheme, public sector banks need to raise ₹1.10 lakh crore from markets, including through follow-on public offers, to meet Basel-III norms, which kick in from March 2019.

Various other performance parameters such as loan growth in education and housing, reach of Pradhan Mantri Jan Dhan Yojana (PMJDY), Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) and Pradhan Mantri MUDRA Yojana will also be discussed. Progress on ‘Stand Up India’ and promotion of digital payments are also part of the agenda.

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The meeting assumes significance as it will be the first after promulgation of the ordinance amending the Banking Regulation Act, 1949, earlier this month.

The government empowered the RBI to ask banks to initiate insolvency proceedings to recover bad loans and promised more measures to resolve the NPA crisis.

The RBI also made substantial changes in the related norms and also warned banks of monetary penalty for missing NPA resolution timelines.

Jaitley had said the ordinance empowered the Reserve Bank to issue “directions to any banking company or banking companies to initiate insolvency resolution process in respect of a default under the provisions of the Insolvency and Bankruptcy Code (IBC), 2016”.

Toxic loans of PSBs rose by over ₹1 lakh crore to ₹6.06 lakh crore during April-December 2016-17.

Gross NPAs of PSBs nearly doubled to ₹5.02 lakh crore at the end of March 2016, from ₹2.67 lakh crore at the end of March 2015.

(This article was published on May 26, 2017)

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