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Terming bad loans as a big challenge for the Indian economy, Finance Minister Arun Jaitley on Friday said that the “stage is now set” for banks to take effective action in at least some cases.
“We are now coming to a stage where a lot of effective legislation and policy steps have been taken. Banks will now have to enforce their rights so that money doesn’t remain blocked in the economy,” he said at the Auditors General Conference, which was organised by the Comptroller and Auditor General.
His comments come at a time when gross non-performing assets of banks rose to 11.3 per cent as on June 2016 against 5.4 per cent in March 2015. To fast track bankruptcy cases, Parliament has passed the Insolvency Code, while the Finance Ministry has also set up the Banks Board Bureau to work with public sector lenders.
Jaitley, however, noted that one of the constraints before bank officials in quickly addressing NPA cases are the limitations of the Prevention of Corruption Act, 1988 as it does not distinguish between an erroneous decision and an improper or corrupt decision.
“The issue is now before a Parliamentary committee,” he said.
Tax complianceAddressing the valedictory session, Jaitley also said that efforts must be made to make more people tax compliant, as it would provide more resources to spend on developmental needs of the country as well as security.
“Nearly 70 years after Independence, we have not become a tax compliant society,” he noted, adding that additional revenue can be spent on rural India, where there is still a lot of inequality.
Jaitley also noted that reasonable tax rates under the goods and services tax will have check tax evasion and ensure greater compliance. “The ultimate objective is to make India more tax compliant,” he said.
The issue of the rate structure under the new indirect tax regime was taken up for discussion at the GST Council meeting earlier this week but a decision is yet to be taken. The Council will hold its next meeting on November 3 and 4.
But, expressing optimism despite the delay in a decision on the rate structure, Jaitley said that the discussions in the GST Council reflect the country’s democratic credentials.
“The maturity of the Indian democracy is being tested,” he said, noting that governments are showing trust in each other.
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