Finance Minister Arun Jaitley on Monday reviewed the performance of public sectors banks
- The finance minister reviewed the performance of state-run banks
- He said government is fully committed to support the banks
- The government supports consolidation in the sector, he said
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Finance Minister Arun Jaitley on Tuesday said provisions for bad loans impacted the financial performance of public sector banks. As a result, state-run lenders suffered losses of Rs 18,000 crore despite posting an operational profit of Rs 1.4 lakh crore in FY16, he added.
"The overall operational profit of public sector banks last year was quite significant. It was in excess of Rs 1.4 lakh crore. It is on account of provisioning that the overall the PSBs declared a net loss of Rs 18,000 crore," Mr Jaitley said at a press conference.
"A significant amount of provisioning having been made in the last two quarters of the fiscal," he added.
State-run banks - which account for around 70 per cent of domestic lending - hold most of India's $120 billion in troubled loans after a lending spree under the last government hit trouble.
The performance of state-run banks have in contrast with their private sector counterparts, who have managed to stay in the green, despite higher bad loans.
Mr Jaitley, who reviewed the performance of state-run banks with senior executives, said the government is committed to further empowering the banks to tackle the bad debt situation.
"Banks should be empowered and constitutionally protected to conduct commercially prudent settlements," the finance minister said.
The government will support state-run banks to commercially deal with their bad loans, Mr Jaitley said. He added the Indian Banks' Association would meet later on Monday to discuss and suggest a mechanism to handle such settlements.
For FY17, the government plans to infuse Rs 25,000 crore in public sector banks, but experts say this is woefully short to revive the banking sector. Mr Jaitley today said that recapitalisation plan for PSB banks was not discussed in today's meeting. (With Agency Inputs)
"The overall operational profit of public sector banks last year was quite significant. It was in excess of Rs 1.4 lakh crore. It is on account of provisioning that the overall the PSBs declared a net loss of Rs 18,000 crore," Mr Jaitley said at a press conference.
"A significant amount of provisioning having been made in the last two quarters of the fiscal," he added.
State-run banks - which account for around 70 per cent of domestic lending - hold most of India's $120 billion in troubled loans after a lending spree under the last government hit trouble.
The performance of state-run banks have in contrast with their private sector counterparts, who have managed to stay in the green, despite higher bad loans.
Mr Jaitley, who reviewed the performance of state-run banks with senior executives, said the government is committed to further empowering the banks to tackle the bad debt situation.
"Banks should be empowered and constitutionally protected to conduct commercially prudent settlements," the finance minister said.
The government will support state-run banks to commercially deal with their bad loans, Mr Jaitley said. He added the Indian Banks' Association would meet later on Monday to discuss and suggest a mechanism to handle such settlements.
For FY17, the government plans to infuse Rs 25,000 crore in public sector banks, but experts say this is woefully short to revive the banking sector. Mr Jaitley today said that recapitalisation plan for PSB banks was not discussed in today's meeting. (With Agency Inputs)
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