Arun Jaitley scotches talk of loan waiver to big corporates

Refuting opposition charges of banks giving loan waiver to big NPA defaulters during Modi government, finance minister, Arun Jaitley on Tuesday blamed previous Congress led UPA government for aggressive lending from 2008 to 2014 and relaxation in loan classification for the NPA woes.

In a signed blog article, Jaitley instead credited his government for carrying out Asset Quality Review (AQR) and bringing loans of about Rs 4,54,466 crore, which were actually fit to be NPA, under intensive scrutiny of AQR.

"The public needs to ask the rumour mongers at whose behest or under whose pressure were such loans disbursed. They should also be asked that when these debtors delayed in repayment of their loans and interest thereon to Public Sector Banks, what decision was taken by the then government," the finance minister said.

Jaitley said rather than taking firm decision against debtors the then government relaxed the loan classification norms to keep defaulters as non-NPA account holders.

"Government has not waived any loans of big NPA defaulters ...," he said, adding under the new Insolvency and Bankruptcy Codes, cases have been instituted in the National Company Law Tribunal (NCLT) for timebound recovery from 12 largest defaulters.

"These 12 defaulters account for non-performing assets totalling Rs1.75 lakh crore. Cases for the recovery of NPA dues from the assets of these big defaulters are under way at various stages," he claimed.

Jaitley said with the object of increase credit off-take and creation of jobs, government has taken "the big decision"of capitalising state-owned banks. Under this, with maximum allotment in the current year, capital increase of Rs 2.11 lakh crore would be effected within two financial years.

"Through capital infusion, banks weakened by NPAs would become strong and become capable of raising adequate capital from the market," Jaitley said.

For receiving the capital, banks will have to carry out several reforms so that such situations do not recur, he added. Jaitley said through strong steps taken over the last three years, "not only have the problems received as legacy" been addressed but reforms for rebuilding the strength of public sector banks have been boosted.

The minister said that the process of creation of strong and large banks began with the integration of State Bank of India, and the recapitalisation announced will bolster this process.

"While honest businesspersons will be able to access loans from strong and reformed banks, strict and clear law and the all-round clean-up initiated by the government would result in a clean system in the country," he said.

CLEARING AIR

• Jaitely said over the last few days, a rumour is being propagated about "waiver of loans of capitalists by banks"
   
• As a result of asset quality review, he said loans of about Rs 4.54 lakh crore were recognised as NPAs