Pranab Mukherjee asks banks to reduce NPAs

“I am happy that banks have taken up the challenge to reduce NPA’s…This momentum now has to be kept up and timely action in this direction would ensure sound financial health of the banking sector,” he said in his address to the CEOs of public sector banks and financial institutions here.

The Finance Minister expressed happiness as the banks were “very proactively” responding to the problems so that NPAs are avoided.

He said recent decisions on restructuring of loans in the textile sector and discoms of the power sector are good examples of NPA management.

“I urge you to deploy various tools at your command for containing and rolling back NPAs in accordance with the guidelines of the Reserve Bank of India,” he added.

About Rs 1.30 lakh crore loan of different banks to power distribution companies (discoms) and Rs 35,000 crore to the textiles sector are under stress and process is underway to restructure these loans so that these segments could get fresh loans.

Deposits of public sector banks (PSBs) grew by 14.4 per cent to over Rs 50 lakh crore in 2011-12 year-on-year,while advances increased by 17.7 per cent to over Rs 40 lakh crore.

Net profits of PSBs have gone up from Rs 44,900 crore to over Rs 49,500 crore in 2011-12 despite a difficult economic scenario,Mukherjee informed.

He said banks have been an agriculture credit target of Rs 5.75 lakh crore for the current fiscal. In 2011-12,agriculture credit exceeded Rs 5 lakh crore.

Mukherjee informed that the Department of Financial Services is working on implementation of an action plan to bring banking payment structure at par with global standards.

Referring to the decision of Oriental Bank of Commerce to waive all charges for RTGS/NEFT transactions up to Rs 1 lakh,he said,”I am confident that all the public sector banks would follow this excellent initiative.”

He also asked the RBI to proactively work on this front and see that all electronic banking transactions could be possible without any charges being levied.

“The use of debit cards to the point of sale without any transaction charges at least for micro and small transactions should be our next objective,” he said.

The farmers should be able to buy their agricultural inputs using KCC-cum-debit cards at point of sale machines,without the use of cash,he said,adding that all fair price shops should be similarly covered.

On financial inclusion,Mukherjee said focus is to provide every family with at least one bank account.

“I am told that the banks have already launched a campaign for opening one account of each family. This would enable us to directly credit the benefits of various schemes into the bank accounts of the beneficiaries through Electronic Fund Transfer,” he said.

As per Census 2011,nearly 3 out of every 5 households are already availing banking services.

The minister further said banks have also taken up the task of converting Kisan Credit Card (KCC) into an ATM Card linked to the bank account of the farmer.

He asked the banks to take up the task on a “mission mode”,as this can be a game changer in the manner agriculture credit is accessible to farmers.

Referring to education loan,he asked the banks to put in place a system where no meritorious student is deprived of an opportunity to get higher or vocational education. He asked the lenders to ensure these loans are provided in a timely and hassle free manner.