Public sector banks' bad loans 'unacceptable': Jaitley

  • PTI, New Delhi
  • Updated: Aug 22, 2015 02:52 IST

Hoping that the situation of the non-performing assets (NPAs) will improve in the coming quarters, finance minister Arun Jaitley on Friday said that all-out efforts have been launched to correct the current “unacceptable” level of bad loans in public sector banks (PSU banks).

“NPAs, which have reached to the present level are unacceptable. They reached this level partly because of indiscretion, partly because of inaction, partly because of challenges in some sectors of the economy, which were evident through the high NPA in these sectors,” he said during the foundation day function of Indian Bank.

Gross NPAs — loans that do not yield returns — of PSU banks at the end of March quarter stood at 5.20% compared with 5.63% in December.

“An all-out effort have been launched to correct the health and bring NPAs down. The effort by the bank administration, the effort by the government to infuse more capital, the effort to get more finance by divesting (government holding), and then greater discretion and more importantly addressing the concerns of each of (stressed) sectors.

“And I don’t have a doubt that over the next few quarters, the banks will be able to address these challenges,” he said.

The finance minister said the government’s plan to infuse capital into the PSU banks over the next four years will “infuse lot of financial strength” in these banks to deal with the bad loan problems.

Jaitley further said the new system to hire best talent, including from the private sector professionals, at top posts in the state-run banks will go a long way in improving the performance of public sector banks, which are “lifeline of the economy”.

“Managements are going to be increasingly professionalised. The fact that government administers them does not mean that government can appoint anyone. Therefore, a very strict appointment procedure, to get the best talent from within and outside has now being followed,” he said.

Public sector banks are saddled with gross NPAs of Rs 2.67 lakh crore as on March 31, 2015.

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