Under pressure from the Reserve Bank of India (RBI), the West Bengal government has finally agreed to extend administrative assistance for recovery of bad loans or non- performing assets (NPAs) from defaulters.
The NPA in the state has already crossed Rs 17,000 crore, which is 6.46% of the gross advances of banks in West Bengal.
In wake of recovery officials of banks being heckled and physically manhandled by the defaulters and their associates during recovery drive, the bankers had been long insisting that the state give police protection.
The RBI too in the last quarter had urged the state government to cooperate with banks.
However, the bankers’ failed to get any firm commitment from the state.
During the 122nd meeting of State Level Bankers Committee (SLBC) on August 22, state finance minister Amit Mitra officially agreed to extent cooperation in loan recoveries.
The meeting resolved that SLBC and RBI would have to go through official modalities before finalising the framework for the state’s assistance.
Mitra suggested that the SLBC should write to the state government supported by specific data and proposals on how it can help.
Mitra also suggested that RBI should write to chief secretary Sanjay Mitra officially highlighting the suggestions for security arrangement in rural areas for banks with a copy to him. In the meeting on August 22, Mitra also assured banking representatives in SLBC that he would personally look into the matter.
The state government had been constantly insisting upon the banks for improving credit to deposit ratio from the existing level of 63%.
The banks though have argued that in absence of an effective recovery system and huge percentage of NPA, a drastic improvement in the credit to deposit ratio would be difficult.
The national average of the credit to deposit ratio is 75%.