Stop lending to defaulting promoters, FinMin tells banks

In a move to combat non-performing assets (NPAs) of close to 5 percent, the Finance Ministry has asked public sector banks to delineate good and bad promoters.

A bad promoter according to the FinMin is any promoter who has willfully defaulted at any project. The ministry has asked all PSU banks to stop lending to such promoters even if it is for another project, subsidiary or any other group company.

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Private sector banks have also agreed to cooperate with public sector banks on this and share data. The finance ministry hopes that with this it will help lower NPAs. Sources in the finance ministry have said that this action has already been taken which has enabled them to get back the money that was due on various projects.