Steps to tackle NPAs are not loan waiver to capitalists: Jaitley
Arun Jaitley said that over the last few days, a rumour is being propagated regarding waiver of loans of capitalists by banks.business Updated: Nov 28, 2017 18:59 IST
Finance minister Arun Jaitley on Tuesday defended the recent steps taken by the government to tackle bad loans in the Indian banking system and said it cannot be construed as a waiver of loans of capitalists by banks.
In a blog, the finance minister also defended the recent amendments to the insolvency and bankruptcy code through an ordinance aimed at keeping wilful defaulters away from the management of businesses and ensuring a time-bound recovery.
The government has been criticized by opposition parties for introducing amendments to the insolvency and bankruptcy code 2016 through an ordinance. The ordinance, which came into effect last week after receiving the President’s nod, bars errant promoters of defaulting companies as well as guarantors to the debtor, directors in the companies and those with loans classified as non-performing assets (NPAs) for at least a year from regaining control of the assets being sold under the bankruptcy process.
“Government has not waived any loans of big NPA defaulters. On the contrary, under the new Insolvency and Bankruptcy Code brought by the Government, cases have been instituted in the National Company Law Tribunal (NCLT) for time-bound recovery from 12 largest defaulters in six to nine months, in NPA cases of Rs 1.75 trillion. Cases for the recovery of NPA dues from the assets of these big defaulters are under way at various stages,” he said.
Jaitley also pointed out that the government’s massive Rs 2.11 trillion recapitalization plan for state-run banks announced last month will help strengthen their balance sheets.
Bad loans of state-run banks almost tripled to Rs 7.3 trillion as of June 2017, from Rs 2.8 trillion in March 2015 after the Reserve Bank of India initiated an asset quality review to recognize bad loans in banks’ books.
The finance minister attacked the Congress-led United Progressive Alliance terming the period 2008-2014 -- years ruled by the UPA -- as one of “aggressive lending”.
“Between the years 2008 to 2014, Public Sector Banks disbursed disproportionate sums of loans to several industries..... when these debtors delayed in repayment of their loans and interest thereon to Public Sector Banks, what decision was taken by the then Government. Rather than take firm decision with regard to such debtors, the then Government, through relaxation by banks in loan classification kept these defaulters as non-NPA accountholders. These loans were restructured through this, the loss to banks was kept hidden. The banks kept giving loans repeatedly to these debtors and kept ever-greening the loans,” Jaitley said.
First Published: Nov 28, 2017 18:01 IST