Finance Ministry holds review meeting with banks on loan recovery

Monday, Mar 21, 2016,17:02 IST By Metrovaartha A A A

New Delhi | The Finance Ministry today held a meeting with senior officials of public sector banks (PSBs) to review their efforts for loan recovery, including from Kingfisher Airlines. This is routine review meeting to assess various recovery efforts.

We are stepping up recovery efforts, said a senior official at the ministry. Asked if Kingfisher’s bad loans were part of the discussions, the official said that all the cases of defaults were reviewed. The meeting convened today was part of the ministry’s exercises to clean up balance sheets of PSBs. It also deliberated on the ways banks can be more proactive in dealing with cases of wilful and genuine defaulters. Gross NPAs of PSBs rose to Rs 3.61 lakh crore at the end of December 2015, while that of private lenders were at Rs 39,859 crore.

Gross NPA ratio as percentage of advances rose to 7.30 per cent while for private banks, it stood at 2.36 per cent as of December-end. There are some 7,686 wilful defaulters who owe Rs 66,190 crore to PSBs, 6,816 suits have been filed and FIR has been lodged in 1,669 cases. Banks have initiated action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (Sarfaesi) Act in 584 such cases.

Amid outrage over embattled Vijay Mallya’s alleged massive loan default, Finance Minister Arun Jaitley and RBI Governor Raghuram Rajan had cautioned against going on a fishing expedition on bad loans so that it doesn’t make banks worried about lending in future. However, the Finance Minister also made it clear that individual misdemeanours will be looked into differently.

Rajan had said we have to be careful as we go forward and criminal actions are penalised. But at the same time, we don’t indulge in a broad fishing expedition which then becomes a reason for banks to get worried about making loans which then hamper the recovery as well as the absolutely important investment in infrastructure that have to take place. So, as a country, as a system, we have to draw that balance very carefully and we are hopeful that we can manage that, the governor had said.

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