Arun Jaitley points to poor show by banks, private investors as challenges to growth

Union Finance Minister Arun Jaitley on Saturday said that poor performance by private investors and banks still remains a challenge for the Indian economy.

"Despite Foreign Direct Investment (FDI) coming to India in large numbers, things are not working forcefully -- investment in domestic industry is not satisfactory level. The condition is related to banks," Jaitley told DD News in an interview here.

But Jaitley did say that the roll out of GST from July 1, and steady global growth will boost the economy.

"But there is a third challenge -- to increase investment cycle of domestic industry, which also has a relation to banking sector performance," Jaitley said.

He had previously criticised banks for having unacceptably high levels of non-performing assets (NPAs), which results to a stunted growth.

"The banks have to recover their bad loans to boost private investment, as domestic private investment needs to pick up. Efficiency has to be brought in so as to recover the money from defaulters," he had said.

The May 5 Ordinance by the government is expected to empower RBI in dealing with bad loans. 

Jaitley said that the ministry has their eye on a number of banks and a number of steps including those relating to sale of assets, closure of non-profitable branches and reduction of overheads when memorandums of understanding (MoUs) are signed with them for recapitalisation, will be taken in due course of time.