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Every default shouldn’t be NPA on 90th day: FM Piyush Goyal

Citing the case of a power producer to which a distribution company owed money, the minister said just because the discom did not pay up, the power producer does not become a defaulter.

Union Budget 2019-20 Date and Time by Finance Minister Piyush Goyal Union Budget 2019-20 Date and Time by Finance Minister Piyush Goyal

Union finance minister Piyush Goyal on Friday said that if a borrower does not get its dues from entities like discoms (power distribution companies), it should not lead banks to classify that borrower automatically as a defaulter.

“Law cannot be blind, wherein in 90 days arithmetically it becomes a non-performing asset (NPA). We will also discuss this and we hope to resolve it quickly,” Goyal said at the post-Budget interaction with the industry organised by CII. On Thursday, the Reserve Bank has made it clear that it is not having a relook at a contentious circular about classifying bad assets on the first-day default and scrapping of loan recast schemes, issued on February 12 last year.

Citing the case of a power producer to which a distribution company owed money, the minister said just because the discom did not pay up, the power producer does not become a defaulter. “I think it is worth discussing with the RBI that if a payment is overdue and discom is not paying its bill, then we will have to think about NCLT and NPA,” he said.

Goyal said the government could ensure capital markets watchdog SEBI withdraws a proposal to disclose every default by listed companies, and hinted that similar measures will be taken up with RBI as well. Power companies have moved the Supreme Court for special treatment to the power sector when it comes to classification of NPAs.
Goyal also said that there is a need for specialised development finance institutions like IDBI, IFCI and ICICI, saying that asset-liability mismatch results in difficulties for the banking system to support the infrastructure sector.

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He said the government is also trying to get the remaining eight banks out of the restrictive prompt corrective action (PCA) framework.

Goyal said the government is working towards bringing 42 crore people in the unorganised sector into the fold of Provident Fund and schemes like Pradhan Mantri Jan Arogya Yojana (PMJAY). He said the Budget has adopted a holistic approach for the welfare of all sections of the citizenry. “The government is working towards ensuring 100 per cent sanitation, electricity coverage, health care, housing for all and for transforming India’s villages while retaining their soul,” he said.

He also urged industry captains to get more people in the unroganised sector enrolled into schemes like ESI, PF and other welfare schemes.

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He said the measures announced in the Interim Budget 2019 were not taken keeping in mind the upcoming Lok Sabha election. “The Budget was not election oriented, there were 100 things on the table…Issues of need and urgency could not wait,” Goyal said.

“Being an Interim Budget, there was very little headroom available for what could be announced in the Budget,” he said.

The Finance Minister said Gujarat and Maharashtra are the two states to furnish details of the farmers who would be benefited by the proposed farmers support scheme. During the interaction, Rakesh Bharti Mittal, president, CII, sought the intervention of the Finance Minister on creation of development finance institutions for financing infrastructure. He said the budget strikes a balance between maintaining fiscal discipline and welfare of vulnerable sections of society.

First published on: 09-02-2019 at 03:14:20 am
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