Finance minister Arun Jaitley has assured bank chiefs that the government is taking a number of measures to revive the Rs 8 lakh crore of stalled projects, most of which are languishing in the infrastructure sector. They said that resolution of the stalled projects will help public sector banks improve their asset quality.
Finance minister Arun Jaitley has assured bank chiefs that the government is taking a number of measures to revive the Rs 8 lakh crore of stalled projects, most of which are languishing in the infrastructure sector. They said that resolution of the stalled projects will help public sector banks improve their asset quality.
In a release on its website, the finance ministry said, "During the period -- April 2014 to January 2015-- public sector banks (PSBs) received 88 new projects proposals with a total investment of Rs 1.41 lakh crore. These are in various stages of appraisal, sanction and stage-wise disbursements."
The finance minister assured all bank chiefs that the government is planning to undertake a variety of measures as far as stalled projects are concerned. "Also, we are thinking about the ways in which resolution of the NPA situation can be done more speedily."
There are "challenges and constraints" as far as the banking sector is concerned and the government would be addressing them. The stalled projects have been adding to the NPAs of the banking sector.
The recent Economic Survey had pointed out that unfavourable market conditions and delayed investments in last few years resulted into an "alarmingly high rate" of increase in stalled projects, which, as of December-end, stood at a staggering Rs 8.8 lakh crore.
On the bad loan issue, the banking sector data revealed that top 10 borrowers accounted for Rs 28,152 crore of non-performing assets of PSU banks. The NPAs of public sector banks rose sharply to 5.64% of total advances in December 2014 from 4.72% in March 2014 with infrastructure loans, gems & jewellery and textiles leading the pack.
Bankers were told that the government was in the process of establishing six new Debt Recovery Tribunals (DBTs) to speed up recovery of bad loans. Bank chiefs told the minister that about 355 Joint Lenders' Forum (JLF) were formed by banks from July 1, 2014 to February 26, 2015; of this 254 JLFs were formed by PSBs with State Bank of India leading with 107.
Bankers were told that the lending targets for micro and small enterprises (MSE) were critical in achieving successful implementation of the "Make in India" programme. The credit needs of this sector should be met by the PSBs, and therefore there is need to achieve all targets of MSE lending, as some banks have not achieved the targets for MSE lending.
The ministry noted that credit growth in housing sector was higher compared to the overall credit growth, while NPAs were lower, making it a priority sector for further growth of credit without fear of rise in NPAs. The overall targets for minority sector lending have been achieved. The progress under the educational loans was also asked to be accelerated.
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