Aug 29, 2013, 09.37 PM IST
Public sector banks should deal strictly with wilful defaulters to check non-performing assets (NPAs) while being sympathetic towards borrowers facing difficulties, Finance Minister P Chidambaram said today.
"Genuine defaulters and wilful defaulters need to be dealt with separately. We have to be strict with willful defaulters," Chidambaram said in an address to the Parliamentary Consultative Committee attached to his Ministry.
Also read: FM for more reforms, wants end to impasse on coal, iron ore
"This is time for hand-holding of borrowers who are facing difficulties, especially industry," he added.
The NPAs of public sector banks rose to 3.84 percent of advances at the end of March from 2.32 percent in March 2011.
The NPAs of banks in the agriculture sector was at 5.46 percent, in MSME at 5.82 percent, in the corporate sector at 3.44 percent, in retail loans at 2.37 percent and real estate at 1.92 percent.
The Finance Minister said levels of NPAs are critically dependent on the performance of the economy. If economic growth was at 8 to 9 percent, then NPAs would be low.
The Finance Minister informed the Committee that all public sector banks are following Basel III norms (global capital adequacy norms) and that "our capital and provisioning requirements are stricter than Basel III norms."
Earlier, members of the Committee made suggestions about recovering dues from wilful and genuine defaulters and how to deal with different NPA cases, according to a statement.
Some members spoke of a softer approach by banks towards genuine defaulters such as farmers and promoters of MSMEs as they are vulnerable to external factors beyond their control.
Members raised the issue of misuse of corporate debt restructuring and downgrading of banks by rating agencies due to NPAs or other factors.
Members of the Consultative Committee who attended the meeting included Anto P Antony, Rajkumari Ratna Singh, Saugata Roy, N K Singh, Shantaram Naik, Murli S Deora (Permanent Special Invitee).
The meeting was also attended by both Ministers of State for Finance, Namo Narain Meena and Jesudasu Seelam.
Also watch the accompanying video.
Tags: finance minister, p chidambaram, defaulters, banking, banks, non performing assets, humane approach, genuine defaulters
Video of the day
Dec 6 2013, 15:02
- in MARKET OUTLOOK
Dec 4 2013, 11:08
- in FII View
Copyright © e-Eighteen.com Ltd. All rights reserved. Reproduction of news articles, photos, videos or any other content in whole or in part in any form or medium without express written permission of moneycontrol.com is prohibited.