Promising a solution to the growing non-performing assets (NPAs) or bad loans problem in the next few days, Union Finance Minister Arun Jaitley has said that the resolution, being worked out with the RBI, will put enough pressure on borrowers to settle dues.
Speaking at an event in New Delhi on Thursday, Jaitley said that the problem of big NPAs are confined essentially to 30-40 companies and accounts of these will have to be fixed to solve the issue.
He said that the government will shortly announce measures to deal with the major problem of bad loans that it has drawn up in consultation with the RBI.
"In the next few days, you will hear of some policy decisions taken between the RBI and the government, in order to bring pressure to bear in resolving the NPAs situation," Jaitley said.
He said that although the bad loans amounts are large, the major ones are restricted to a limited number of companies.
"Big NPAs are confined to 30..40..at best 50 companies," he said.
The magnitude of the problem can be gauged from the figures of state-run banks, which at the end of the current fiscal's second quarter that ended in September, rose to Rs 6.3 lakh crore, as compared to Rs 5.5 lakh crore at the end of the first quarter.
Earlier, this month Jaitley met with RBI Governor Urjit Patel and other senior officials here to discuss the NPAs issue.
The meeting discussed the idea of a Private Asset Management Company (PAMC), as well as a National Asset Management Company (NAMC), to tackle the bad loans issue proposed recently by RBI Deputy Governor Viral Acharya.
As per the plan, the banking sector could be asked to restructure about 50 large stressed assets in sectors like metals, construction, telecom and textiles, by December 31, 2017.
According to sources, the meeting also discussed the concept of a "bad bank" that has been proposed by Chief Economic Advisor (CEA) Arvind Subramanian.
To a query regarding the Universal Basic Income (UBI) scheme advocated by the CEA, Jaitley spoke in praise of the idea and said that an interested state could consider setting up a pilot project.
"Even before he (Subramanian), floated the UBI idea, it had got reflected in the budget of Jammu and Kashmir," Jaitley said.
"I've always considered it a very good idea. Any state government which is willing to take the chance, can consider a pilot project," he added.
The Economic Survey 2016-17, presented in January, advocated a UBI scheme as an alternative poverty reduction mechanism in place of various ongoing social welfare programmes.
The Survey, authored by the Chief Economic Advisor, pitched for a scheme to transfer a reasonable basic income to Indians below the poverty line.
"A UBI that reduces poverty to 0.5 per cent would cost between 4-5 per cent of GDP, assuming that those in the top 25 per cent income bracket do not participate," the Survey said.
Elaborating on the scheme, which has no precedents globally, Subramanian has earlier said that it would entail making an unconditional cash transfer of about Rs 10,000-Rs 15,000 a year to every citizen, and could replace more than 1,000 schemes the government runs for poverty elimination.
With IANS Inputs