Updated: October 21, 2016 7:17:58 pm
Terming the mounting bad loans as “next big challenge” for the country, Finance Minister Arun Jaitley on Friday said banks should enforce their right and recover dues in the larger interest of the economy.
Watch What Else is Making News
He also made a case for change in Prevention of Corruption Act 1988 to distinguish between the corrupt and the erroneous decisions to provide comfort to PSU bankers in settling NPAs.
As regards mounting non-performing assets (NPAs), Jaitley said “the problem of NPAs, which is of course the next big challenge as far as Indian economy is concerned, we are now coming to a stage when a lot of effective steps both legislative and in terms of policy have been taken”.
Banks now have to enforce their right in the larger interest of the economy because if money keeps lying and blocked with one particular section, then your capacity to lend to others itself is adversely impacted, he said.
“Therefore as far as policy relation with regard to certain sectors are concerned that being done, empowerment of banks by virtue of legislation and RBI guidelines has been done, a long rope have be given to people to improve and sort matters out,” he said at an event organised by government auditor CAG.
“I think stage is now set for banks to take effective action in some cases so that people realise that indefinitely you cannot hold on public money because bank money is also at the end of day is public money itself,” he said.
Gross NPA of public sector banks has surged from 5.43 per cent (Rs 2.67 lakh crore) in 2014-15 to 9.32 per cent (Rs 4.76 lakh crore) in 2015-16.
Referring to the constraints imposed by the Prevention Of Corruption Act on PSU bankers in resolving NPAs, the Finance Minister said “a time has come in the liberalised regime where you find the government taking, and civil servants taking important commercial decisions, public sector companies and banks taking important corporate and commercial decisions.”
In settling the current lot of NPA, he said, it is this one problem of the Act which is also creating challenges before the officials of various public sector banks.
“A private sector bank has liberty to settle its NPAs…an officer of public sector banks would be constrained by the provisions of 1988 Prevention of Corruption Act,” he said.
“A time has come in the liberalised regime where you find the government taking, and civil servants taking important commercial decisions, public sector companies and banks taking important corporate and commercial decisions”, he said.
Therefore a law, which recognises this clear distinction between a corrupt decision and erroneous decision, is required he added.
This distinction needs to be very finely stated, he said, adding, “the corrupt decision must be punishable, the erroneous decision only can give you a post facto analysis so that system is wiser by that experience but may not attract criminal consequences”.
📣 The Indian Express is now on Telegram. Click here to join our channel (@indianexpress) and stay updated with the latest headlines
- The Indian Express website has been rated GREEN for its credibility and trustworthiness by Newsguard, a global service that rates news sources for their journalistic standards.