DNA Money Edit: Recognising NPAs will make banks stronger

When it comes to dismissing rumours, finance minister Arun Jaitley doesn't mince words. He has raised a straight question on the non-performing assets of Indian banks that the Opposition may find difficult to answer: who forced public sector banks to disburse loans in the previous years that have now turned bad debts? Jaitley went on to blame the previous government that relaxed the loan classification norms that helped defaulters remain non-NPA account holders. As a result of asset quality reviews (AQRs) recently, loans of about Rs 4.54 lakh crore that were actually fit to be bad debts but were earlier swept under the carpet were recognised as NPAs.

Under the new Insolvency and Bankruptcy Code, cases have been instituted in the National Company Law Tribunal for timebound recovery from 12 largest defaulters, who cumulatively accounted for bad loans of Rs 1.75 lakh crore. One should not forget that many cases for the recovery of NPA dues from the assets of these big defaulters are under way at various stages.

What is more, the government's move to recapitalise public sector banks with a Rs 2.11 lakh crore plan has pushed up bank stocks to the stratosphere. The move will surely make banks stronger and contribute to the nation's development in a much more constructive manner.