On Tuesday, After a review meeting with public sector lenders Finance Minister, Arun Jaitley has said that the NPA, also known as Non Performing Assets are on the decline in the country as recoveries have picked up in the Public Sector Banks (PSU).
After the annual review meeting with Public Sector Banks’ chiefs in New Delhi, Mr. Jaitley said, the debtors of banks are paying up in anticipation of Insolvency and Bankruptcy Code being applied on them, addressing media.
The secretary of financial services, Rajiv Kumar said after the meeting that the government is expecting recoveries to the tune of ₹1.8 lakh crore to come in this year. These will include recoveries through the IBC and outside of it as well.
Mr. Kumar also added that the primary focus of the banking sector as a whole is now maximizing recoveries and arresting fresh NPA(Non-Performing Assets )creation and slippages. He said that ₹18,000 crore of non-core assets will be sold in the current fiscal.
The rise in recovery along with improving the profitability of PSU Banks, the fear of IBC pushing promoters to repay loans on time and recent efforts to empower bankers to take commercial decisions bode well for the banking space going forward, the finance minister said.
The government will also consider the request of PSU banks for a relaxation in the Prompt Corrective Action (PCA) guidelines as credit growth is being stifled. Jaitley said that the government is committed to aiding and recapitalizing PSU Banks.
On a question regarding Bank Unions’s reservation on a merger plan of Vijaya Bank, Bank of Baroda and Dena Bank, the Jaitely said, it will be in the interest of bank employees. He said the idea is to create a single and strong bank, not a weak large bank.
The minister also declined from commenting on the IL&FS saga, which has caused a scare among the NBFC players in the market over higher cost of funds going forward.
The finance ministry also launched the financial inclusion index, which will gauge the penetration of banking services across states, and encourage healthy competition among states.
- Location: India
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