Defaulters won’t be allowed to sleep well, says Jaitley
business Updated: Jun 06, 2016 06:12 IST
OSAKA: Amid 10 state-run lenders suffering losses of over Rs 15,000 crore during the January-March quarter, finance minister Arun Jaitley has promised greater capital support to banks, while warning that defaulters will not be allowed to “sleep well”.
“You cannot indefinitely have a situation where people who owe money sleep well and bankers have to worry. I think the people who owe these monies will also have to act,” the finance minister said.
Asserting that all non-performing assets (NPAs) — loans that do not yield returns — are not frauds, he said there may be some improper loans, but there were a large volume of loans resulting from business losses, or on account of sectoral losses.
“The loans were rightly given, sectors haven’t done well. So to say that these are all skeletons stumbling out (is not correct). A business loss is not a skeleton. A skeleton is something, which is done as a scam or a scandal, and therefore we must be careful to distinguish between chalk and cheese as far as banking NPAs are concerned,” he said
The finance minister, who is on a six-day visit to Japan to attract investment, said the losses stemmed from provisioning for bad debts, and most banks, including State Bank of India and Punjab National Bank, reported profits at operational level. “Look at the balance sheets of these banks. PNB operationally had a good profit, SBI had a good profit.”
Stating that NPAs have always been there, Jaitley said: “Whether you keep it below the carpet or you bring it into the balance sheet... I think a transparent balance sheet is the best way of doing business and that’s what banks are doing today.”
The bankruptcy law and the strategic debt restructuring mechanism of the Reserve Bank of India (RBI) are also there to empower banks, he added.