To fast track bankruptcy cases, Parliament has passed the Insolvency Code and the Finance Ministry has also set up the Banks Board Bureau to work with public sector lenders.
Terming bad loans as a big challenge for the Indian economy, Finance Minister Arun Jaitley on Friday said that the “stage is now set” for banks to take effective action in at least some cases.
Jaitley was addressing participants at the Auditors General Conference, which was organised by the Comptroller and Auditor General.
“We are now coming to a point where a lot of effective legislation and policy steps have been taken. Banks will now have to enforce their rights so that money doesn’t remain blocked in the economy,” he said.
His comments come at a time when gross non-performing assets of banks rose to 11.3 per cent as on June 2016 against 5.4 per cent in March 2015.
Jaitley, noted that one of the constraints before banks in quickly addressing NPA cases are the limitations of the Prevention of Corruption Act, 1988.
The act does not distinguish between erroneous decision or corrupt decision. “The issue is now before a Parliamentary committee,” he said.
Addressing the session, Jaitley also said that efforts must be made to make more people tax compliant, as it would provide more resources to spend on developmental needs and security of the country.