FM warns defaulters: Clear dues or give control to others

Krishnanand Tripathi
Finance Minister Arun Jaitley.

Finance Minister Arun Jaitley.

Finance Minister Arun Jaitley Thursday issued a stern warning to big loan defaulters responsible for a steep rise in the bad loans or non-performing assets of the public sector banks. He warned them either to clear their dues or allow others to take control of their companies.

However the finance minister admitted that there is no short term solutions to the problem of bad loans.

Jaitley said: “You can’t have a surgical solution to it.”

Rising NPAs or non performing assets of public sector banks have seen sharp rise in recent years

The RBI has already recommended banks to initiate insolvency proceedings against 12 large defaulters.

As per an official reply given in the Rajya Sabha in the Monsoon session, the total advances to corporate sector in 2017 were around 18 lakh crore rupees and nearly 15% (14.83%) or 3.44 lakh crore rupees were declared as non perorming assets (NPAs).

As per the official reply in the Rajya Sabha, as on March 31, 2017 the gross NPAs of public sector banks in iron and steel sector alone was Rs. 165,661 crore and for power sector it was Rs.30,380 crore which is 56% of the total NPAs of advances given by the public sector banks to corporate sector.

Jaitley also said that consolidation of PSU banks was on cards as the country needs fewer but stronger banks.

Defending the demonetisation a day after the release of RBI data that disclosed that nearly 99% of the total banned notes had come bank in the banking sector, Jaitley said the fallout of demonetisation was on predicted lines and the economy would benefit in medium and long term.

Jaitley said the fact that money got deposited in banks did not mean that all of it is legitimate money.

“It’s nobody’s case that black money has been completely eliminated after demonetisation,” he said.

Jaitley said demonetisation, coupled with GST, will give a “significant boost” to direct tax revenues as many people have come under the tax net.

Although an overwhelming amount of money was deposited in banks it is not a concern for the government as it is good for the economy that more money has come into the formal system.

“The fallout of demonetisation is on predicted lines…the fact that money got deposited in banks doesn’t make it legitimate money,” he said, adding the country was ready for demonetisation even though there was political resistance.

The RBI yesterday said about 99 per cent of Rs 15.44 lakh crore demonetised currency came back into the system.

On the Goods and Services Tax (GST), Jaitley said its inflationary impact has been avoided and there is a scope of convergence of tax rates going forward.