Finance Minister Arun Jaitley today asked public sector banks to take "effective action" in cases of fraud and wilful loan defaults.
The growing economy will also help banks grow in strength, he said at the annual review meeting of PSBs here.Conversely, as the lifeline of the economy, banks would need to build their strength to support the lending needs of a growing economy, he added, according to an official release.
Reviewing the performance of state-owned lenders, he said that the formalisation of the economy would help India achieve sustainable growth of 8 percent. The GDP growth has been estimated at 8.2 per cent in the first quarter of the financial year.
The Finance Ministry, in a series of tweets highlighting today's annual review meeting with public sector banks, said:
FM, Shri @arunjaitley exhorted the banks to ensure all steps at their end to ensure clean lending & effective action in cases of fraud & wilful default, to justify the trust reposed in banks.Banks must strive to be seen always as institutions of clean & prudent lending.
The meeting took place on the backdrop of the "Alternative Mechanism" deciding to merge three public sector banks—Bank of Baroda, Vijaya Bank and Dena Bank—with a view to create a global-sized lender which would be stronger and sustainable. Banks have stepped up efforts as far as recovery of bad loans is concerned.
Lenders have made recovery of Rs 36,551 crore in the first quarter of the current fiscal—49 percent growth over the last fiscal. During 2017-18, the banks recovered Rs 74,562 crore.
Jaitley, who also holds the portfolio of Corporate Affairs, said the formalisation of the economy through the Insolvency and Bankruptcy Code, GST, demonetisation and digital payments have enabled better assessment of financial capacity and risks, and coupled with inclusive growth through massive financial inclusion, has unlocked purchasing power which will drive India's growth.
The Finance Minister, Shri @arunjaitley further said that formalisation of the Indian Economy coupled with inclusive growth through massive financial inclusion,has unlocked purchasing power which will drive India's growth.This should help India sustain a growth rate of around 8%.
While noting the positive results from the IBC mechanism, Jaitley also flagged the need to assess and revisit the efficacy of the Debts Recovery Tribunal mechanism, particularly in view of long lead times in disposal of cases.
He underscored the requirement for expediting recovery through the DRT mechanism, so that their original objective of speedy recovery proceedings is realised, the release said.
"The Finance Minister noted that the perception regarding the health of public sector banks has become more positive as banks have posted positive results in terms of resolution, recovery, provisioning and credit growth," it said.
Jaitley said that the amendment of IBC to debar willful defaulters has had the unintended positive consequence of defaulting borrowers stepping forward to make payment in order to participate in the resolution process.
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.
