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FM meets public sector banks’ heads; wants to empower banks amidst NPA crisis

During the meeting, Arun Jaitley discusses various key challenges facing by the banking sector

Policy Pulse
Publish Date: Jun 6 2016 4:06PM | Updated Date: Jun 7 2016 11:57AM

FM meets public sector banks’ heads; wants to empower banks amidst NPA crisis

Union Finance Minister Arun Jaitley on Monday met Chief Executive Officers (CEOs) of Public Sector Banks (PSBs) to discuss various key challenges facing the banking sector including growing non-performing assets, a day before RBI Governor Raghuram Rajan takes a call on key rates in the monetary policy.


“I had a meeting with PSB heads and we discussed various suggestions to empower banks,” FM Jaitley said. “The key discussion topics were credit flow, NPA position and banks expansion,” he said. 


Here are some of the important points that FM Jaitley made during the meeting.


*The government is fully committed to supporting banks; Insolvency and Bankruptcy Code will becomeoperational very soon.


*Overall operational profits of PSBs last year was quite significant. PSU banks declared net loss last year due to high provisioning


*Discussed Progress of UDAY scheme. UDAY scheme has been reasonably successful


*Government firmly believes that the NPA situation has arisen on account of certain sectoral debts


*No discussion took place on bank recapitalisation in today’s meeting. The government has already committed Rs 25,000 crore capital, we are willing to do more.


Earlier, Jaitley on Sunday said government has sufficiently empowered the banks to recover their dues but added that they will have to maintain their credit lending facility so that lending for growth continues. “Banks must also now start supporting growth which is extremely important,” he said.


On the RBI monetary policy review, Jaitley said, “It’s an important function of the RBI. We do not comment on it before the RBI announces the policy.


At the same time, he said, “Of course the economy is becoming stronger and wherever the gaps are, our effort now is to bridge them and achieve further growth.