Jaitley blames reckless lending during UPA for NPAs | india news | Hindustan Times
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Jaitley blames reckless lending during UPA for NPAs

Finance Minister Arun Jaitley said the government was trying to put all its resources into dealing with NPAs.

india Updated: Jan 05, 2018 16:58 IST
HT Correspondent
Finance Minister Arun Jaitley speaks in the Lok Sabha in New Delhi on Thursday.
Finance Minister Arun Jaitley speaks in the Lok Sabha in New Delhi on Thursday. (PTI)

Union finance minister Arun Jaitley said on Thursday the government is bringing all possible resource to resolve the issue of the bad loans of public sector banks and mainatined that it was public investment that had enabled the country to get over 7 per cent growth when private invesment was dismal.

Responding to a short-duration discussion in the Rajya Sabha on the state of the economy, Jaitley said that it was reckless lending by banks during the boom years in the previous UPA government that had led to accumulation of such huge non-performing assets (NPAs), or bad loans, in the Indian banking system.

“As regards the banking system, we are trying to put all our resources into it (NPAs issue),” he said.

Referring to the Rs 2.12 lakh crore recapitalisation plan for state-run banks approved by the government in October, the Finance Minister said the objective is to ensure that the lenders’ ability to support growth is not impacted by their combined NPAs which have crossed Rs 7.5 lakh crore.

“Reckless lending without proper risk management has affected the banks capacity to support growth,” he said, referring to the high-growth period after 2008 when the massive lending by banks is now being reflected in their accumulated bad loans and through heavily leveraged corporate balance sheets.

“This is another reason which has contributed to the reduced private investment,” he added.

According to the American rating agency S&P-owned Crisil, Indian banks will need to take a haircut of up to 60 per cent on their bad loans to resolve the issue of NPAS, which is holding up higher economic growth.