Finance Minister Arun Jaitley will meet chief executives of public sector banks (PSBs) here on June 6 for the customary annual performance review.

However, this year’s meeting assumes significance as it comes at a time when a massive bad loan clean-up — prompted by RBI’s diktat on asset quality review — has left several big banks deep in the red.

Stressed assets

On their part, PSBs — especially the large ones — have been focussed on recognising non-performing assets (NPAs) and not compromising on restructuring of assets even if it meant spooking the markets or hurting investor sentiments.

Stressed assets have become such a high priority for most banks that many of them have turned lethargic on taking steps to improve credit growth.

Jaitley’s meeting with bank chiefs also comes at a time when bank consolidation is in the air, with State Bank of India looking to gobble up all its five associate banks and transform into a bigger behemoth.

The financial performance of most PSBs for the just completed March quarter was weighed down by the spike in bad loans and provisioning due to the RBI review.

The slow-paced Indian judiciary — which the Banks Board Chief Vinod Rai recently described as “recalcitrant” — too does not help the cause of the Indian banking system, which faces multiple challenges.

Jaitley may also use the occasion to provide some comfort to bankers on the reforms being undertaken by the government on the judicial side.

Wilful defaulters

Bank unions have been agitating over managements’ tardiness in recovering loans extended to big corporate houses.

As many as 7,000 ‘wilful defaulters’, who cumulatively owe about ₹60,000 crore to the banking system, have been identified.

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