Union Finance Minister Arun Jaitley
Union Finance Minister Arun Jaitley

Jaitley underscores need for banks to crack down on frauds

ANI | Updated: Sep 25, 2018 21:13 IST

New Delhi [India], Sep 25 (ANI): Union Finance Minister Arun Jaitley on Tuesday highlighted the impact of the formalisation of the Indian economy - through the Insolvency and Bankruptcy Code (IBC), GST, demonetisation and digital payments - on Public Sector Banks (PSBs), while also stressing on the need to clamp down on bad debts and fraudulent loans.
Addressing a presser after the Annual Review Meeting of the PSBs here, Jaitley said, "PSBs occupy a very large market share as far as India is concerned. But the last several years have been a challenging time for them as they are not just into retail banking, they finance large projects. Also, a large part of their lending has been held up in the NPAs (Non-Performing Assets)."
The Finance Minister stated that the challenges for the PSBs included slow recoveries and an indefinite legal process. Jaitley said that the processes prescribed by the government and the Reserve Bank of India to counter the challenges were not yielding results.
"This year's presentation was different. Even though these are early days as far as the IBC is concerned, its impact was clearly visible. After a prolonged period of several quarters, the last quarter saw a net profit. Earlier, the recovery was slow and whatever profits they were making was going into provisioning. Based on what was seen in the last quarter and the projections for the quarters to come, the good news is that the NPAs are on the decline because recoveries have picked up," Jaitley added.
The Finance Minister said that an improved performance of the banking sector should help India sustain a growth rate of around eight per cent, adding that a growing economy will conversely help banks grow in strength.
Jaitley urged the banks to ensure all steps at their end to ensure clean lending and effective action in cases of fraud and willful default, to justify the trust reposed in banks and that they must strive to be seen always as institutions of clean and prudent lending.
Stressing on the need to assess the effectiveness of the Debts Recovery Tribunal (DRT) mechanism, Jaitley laid emphasis on reducing the lead time in the disposal of cases, so that the objective of speedy recovery proceedings is achieved.
"Debtors who fear that they are likely to cross the red line are paying up in anticipation of an IBC process compelled on them," Jaitley said.
The Finance Minister also underscored the need for trust and confidence in the banking sector as a prerequisite for meeting the needs of the economy.
He also noted that the recent amendments to the Prevention of Corruption Act should clear all apprehensions in the minds of bankers for supporting investments in the interest of the economy, nation, and the banks. (ANI)

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