New Delhi: Exhorting public sector banks to take tough action against wilful defaulters, Finance Minister P Chidambaram today said a situation where “promoter is prosperous but company is sick” is not acceptable.
In his meeting with heads of state-owned banks, he said tough measures need to be taken against wilful defaulters.
Chidambaram said the “promoter is prosperous but company is sick” is not an acceptable position, and asked banks to “form a consortium and take joint action against such defaulters”.
While addressing the bankers, he said they need to redouble efforts for the recovery and take tough measures against wilful defaulters.
The top 30 non-performing assets (NPAs) of state-owned banks account for 40.2 per cent of their Gross NPAs.
Talking to reporters after the meeting, Financial Services Secretary G S Sandhu said banks have been asked to focus on their top 30 defaulters.
“(There will be) tough action against wilful defaulters, which can include even the change of management because so much money is stuck. Banks have to provide huge amount in terms of provisioning, about Rs 90,000 crore going into provisioning.
“So we want to recover that. If original borrower does not come up with some option of repayment, then we will call some other person, if he is able to provide that then assets could be handed over to the other person,” Sandhu said. According to an official statement, the sluggishness in the domestic growth during the recent past and the tepid recovery in the global economy have impacted the NPAs. Gross NPAs of PSBs have risen from 3.84 per cent as on March, 2013 to 4.44 per cent as at the end of March, 2014.
“However, from a peak of 5.07 per cent, GNPAs in the third quarter ending December, 2013, these have come down to 4.44 per cent (provisional) in the last quarter of the year ending March, 2014,” it added.
CEOs of PSU banks at the meeting elaborated upon the measures being taken to bring down the NPAs.
The statement further said the slowing down of the economy has impacted the results of the banks. Year-on-year deposit growth of 19 PSBs as on March 31, 2014 was 11.43 per cent and advances growth was 10.69 per cent.
Gross NPAs had increased and net profit had decreased vis-a-vis the performance reported in 2012-13.
The housing sector including priority sector housing saw a growth of 18.4 per cent during the year 2013-14 with a total lending of Rs 5,408 lakh crore.
NPA in housing loan has reduced from 1.8 per cent in 2012-13 to 1.47 per cent in 2013-14.
Sandhu also said public sector banks have met their lending target to minorities (15 per cent of priority sector lending).
The number of students availing of education loan has gone up to 25.72 lakh accounts with a credit outstanding of Rs 58,265 crore.