Finance Minister Arun Jaitley on Wednesday said that non-performing assets of banks have shown a declining trend in the last quarter of the current fiscal and that the proposal of a bad bank is currently under discussion.
Addressing the first meeting of the Consultative Committee attached to the Ministry of Finance, Jaitley said that dealing with NPAs is a challenging task.
“The core problem of NPAs is with very large corporates, though few in numbers, predominantly in the steel, power, infrastructure and textile sectors,” he said.
Though latest data on NPAs is not available, gross NPAs of public sector banks are estimated to have been on the rise till the second half of last year when it increased to ₹6.3 lakh crore by September 30, 2016. It stood at ₹ 5.5 lakh crore at the end of the June quarter.
On the issue of setting up a ‘bad bank’, Jaitley said that several possible alternatives exist and the issue is being debated on public platforms.
The government is also considering setting up more Oversight Committees that would look into cases referred to it by different banks. The existing committee was set up by the Reserve Bank of India to look into sustainable structuring of debt assets.
Sector-specific measures The Finance Ministry is also taking sector-specific measures to deal with the problem of NPAs, particularly for the resolution of large debts.
“The steel sector is on its path of recovery while many decisions have been taken in the infrastructure, power and textile sectors to resolve their problems,” Jaitley said.
The Finance Ministry also made a presentation outlining the steps being taken to resolve NPAs.
The Members of the Committee also gave suggestions, such as closer monitoring of asset reconstruction companies and fixing the norm for gross NPAs at 9-10 per cent.