Finance Minister Arun Jaitley today asked the public sector banks to recover every single penny lent to big companies. The strong message comes on the day when the government informed the country’s apex court that the high profile defaulter Vijay Mallya had already left the country a week before.
A group of 17 banks has approached the Supreme Court seeking a ban on foreign travel of Vijay Mallya, whose companies owe close to 9 thousand crore rupees to a group of banks, majority of them public sector banks.
However, attorney general today informed the court that the high profile defaulter has already left the country on March 02. The court asked the government to serve the notice through Indian high commission in London as the AG informed the court that Mr. Vijay Malya may be in UK.
As the banks are struggling to recover the money, Finance Minister threw his weight behind the lenders, saying each penny lent must be recovered.
“Well, I think it’s not only a legal but a moral obligation that every banking institution in India has to recover the last pie,” Jaitley said.
“The government cannot accept a “situation where 15 or 20 people are sitting on so much money of the banks, that the ability of the banks to lend to thousands of others” get severely impacted, he said.
“Whatever steps the banks will take in this matter, the government of India will stand behind them but also actively encourage them to protect their own interest which is also the larger public interest because the public money is involved in the banks.
“After all, I am taxing the people of India to put money into the capital of the banks,” he told ET Now. He was asked about banks’ efforts to recover dues from Mallya. The Supreme Court will tomorrow hear a plea of 13 banks, which had advanced loans of over Rs 9,000 crore to Mallya’s firm, seeking a direction to restrain him from leaving India.
The Debt Recovery Tribunal yesterday barred Mallya from accessing USD 75 million (Rs 515 crore) exit payment from Diageo till the loan default case with SBI is settled while the ED registered a money laundering case against him in another default case.
Talking about bad loans in the banking system, Jaitley said there are two kinds of NPAs, one is because of economic slowdown while the other emanates from questionable practices.
There are NPAs on account of the industrial downturn in sectors like steel, infrastructure and power.
“In some cases, some companies are taking bonafide steps to sell assets so that companies come back into green. These are cases where we will have to give slightly a longer rope, because (we) don’t want crisis situation,” the Finance Minister said.
“But there are cases, which border more on questionable practices and there I think the provision of whatever laws exists will come into play,” Jaitley said.Gross Non Performing Assets (NPAs) ratio of the public sector banks increased from 5.43 per cent as on March 2015 to 7.30 per cent as on December 2015.
Gross NPAs of PSBs increased from Rs 2,67,065 lakh crore in March 2015 to Rs 3,61,731 lakh crore in December 2015.