Finance Minister Arun Jaitley said on Monday that the Centre will empower public sector banks (PSBs) to take commercially prudent decisions for dealing with the surge in bad debts.
Besides legally empowering PSBs, the Centre will also provide protection to bankers on their bona fide decisions on settlement of NPAs, the Finance Minister said after a two-hour meeting with the Chief Executives of PSBs on Monday.
Jaitley’s remarks came as music to the ears of bankers who are unable to stem the tide of NPAs due to several reasons, including a slowing economy and an inability to handle “wilful defaulters” who collectively owe at least ₹60,000 crore. It also came on the heels of Banks Board Bureau (BBB) Chairman Vinod Rai’s remarks last month that a new “intermediate mechanism” will be put in place to provide cover to bank chiefs on their bad-loan resolution decisions.
Jaitley also made it clear that there was no timeline to achieve these objectives.
As for legal empowerment, Jaitley expressed confidence that another set of amendments on debt recovery legislation and SARFAESI law (securitisation legislation) will become a reality in the next session of Parliament.
“These set of new laws along with SDR would definitely empower the banks to handle the situation,” Jaitley said.
At today’s meeting, Jaitley asked the Indian Banks’ Association (IBA) to come up with specific suggestions on how the Centre could “protect” the bona fide decisions of bankers.
Asked if today’s meeting discussed any further capital requirements for PSBs, Jaitley replied in the negative.
“I have already said the government is committed to infuse capital of ₹25,000 crore in PSBs this fiscal. If more funds are required, we will look at it. We stand by this statement,” Jaitley said.