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Be stern in loan recovery: Finance minister

Chidambaram asks banks to adopt a no-nonsense approach, stresses on the need to fix 'affluent promoters and sick companies' syndrome.

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Hardening his stand on bad loans, finance minister P Chidambaram on Monday told public sector banks to take firm steps to recover them. In a reference apparently made to UB Group chairman, Vijay Mallya, Chidambaram said the “country cannot afford to have affluent promoters and sick companies”. On the government’s part, he acknowledged that road and power sectors are facing real problems and the ministries concerned will look into them.

After a review meeting with public sector bank chiefs here, the FM said, “We wish banks to take firm steps to recover NPAs. Promoters have to bring additional money and companies have the duty to pay back loans. We cannot have an affluent promoter and a sick company. Without doing anything that will kill the business of industry, banks will have to recover NPAs.”

The gross NPA of PSU banks has more than doubled to Rs 1,55,000 crore in December 2012 from Rs 71,080 crore in March 2011. P Chidambaram has referred to sick companies and affluent promoters at a time when the NPA of a consortium of 17 banks that lent money to Mallya’s Kingfisher Airlines is mounting. Kingfisher Airlines owes Rs 7,000 crore to this consortium. 

On the stalled projects in the infrastructure sector, Chidambaram said the ministries concerned will take appropriate steps. The ones in power, coal, iron, steel and road transport, he added, are a matter of worry. “About 215 projects having an investment of Rs 7 lakh crore are currently stalled. The banks have disbursed loans of Rs 54,000 crore towards them,” he said. 

Even new projects in the aforesaid five sectors are not immune to this slowdown. At least 126 new projects worth Rs 3.55 crore are stuck, to which the exposure of the PSU banks stands at Rs 43,000 crore. “The real problem is in road and power. We have to get 68 new projects in road and 40 new in power going,” he added.

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