Bulk of NPAs arose out bank loans before April 2014: Arun Jaitley
Arun Jaitley said on Tuesday that the Narendra Modi-government has not written off any corporate loans and such assumptions were just ‘misconceptions’.business Updated: Jan 02, 2018 16:49 IST
Finance Minister Arun Jaitley on Tuesday said the bulk of non-performing assets of public sector banks have arisen out of loans disbursed before 2014, before the BJP came to power at the centre. He also attributed the rise in the quantum of the NPAs to bringing on record the losses that were not being shown by the banks in their account books.
Jaitley’s statement came in response to a poser during the Question Hour in Rajya Sabha by Congress leader and former finance minister P Chidambaram, wanting to know how many loans given to banks after May, 1, 2014 have become NPAs.
“It is absolutely clear that the bulk of the NPAs today have arisen out of loans which were given prior to 1.4.2014,” Jaitley said, listing aggressive lending practice and lack of risk assessment as causes for the losses.
Earlier, Samajwadi party MP, Neeraj Shekhar sought the government’s reply on why the NPAs that were termed as a “scam” during the UPA’s tenure had risen from Rs 2 lakh crore to Rs 9 lakh crore.
Jaitley informed the upper house that the rise in the quantum was on account of an exercise carried out by the government while examining the NPAs and found out that several banks had extended their loans. “RBI found out that in the books these were loans, but were assets that were non- performing. Since these are not hidden anymore, the number has gone up,” Jaitley said.
On the action being taken by the government to fix responsibility, Jaitely said the government is taking the necessary steps by fixing criminal cases and initiating recovery processes.
Again, in response to Shekhar’s query on why the government does not waive off loans for farmers as it has done for corporate houses, Jaitley said the government has not waived off loans to corporate houses.
“Only when a loan remains non-performing after four years, and the bank feels that the chances of its recovery are slim, it changes the category of the loan. But the debtor’s responsibility is to pay back remains. The bank does this provisioning to get relief in the Income Tax,” he said.
The finance minister said that in the asset quality review undertaken by the Reserve Bank of India (RBI) in 2015, it found that in the non-performing loans there were cases where the banks did aggressive lending, or did not do proper risk assessment and there were also cases of wilful default.
Jaitley on cryptocurrencies
The finance minister also informed the Rajya Sabha that bitcoins and other forms of cryptocurrencies are not legal tender in the country and this has been the government’s stated position since 2013. The government has as latest as December 29 cautioned investors to be wary of virtual currencies he said.
“These (currencies) operate online and are of various kind, there are 785 virtual currencies identified world wide and 11 such in India. It functions with anonymity and within a virtual community,” Jaitley said.
On the actions being taken by the government to crackdown on the use of cryptocurrencies he said, an inter-departmental committee has been set up under the chairmanship of the secretary, department of economic affairs, the report of which is awaited.