Finance Minister Nirmala Sitharaman on Saturday directed National Asset Reconstruction Company Ltd (NARCL) to further improve its functioning on acquisition of stressed accounts.
NARCL and banks should hold regular meetings to expedite the on-boarding of stressed accounts, Sitharaman said in the review meeting she chaired with chief executives of public sector banks here.
In addition to this, Sitharaman also emphasised the importance of mobilising deposits, urging PSBs to innovate and offer attractive schemes to enhance their deposit base, which will also enable them extend more credit.
Bank frauds
On fraud-related matters, the Minister, while expressing satisfaction at the improved performance of the public sector banks, stated that frauds pose a critical threat to the security of both individual customers and the financial institutions themselves, which can lead to financial losses and reduced public trust in the banking system.
Sitharaman asked PSBs to concentrate on fraud prevention with both large corporate frauds and wilful defaults, as well as on actions that defraud individual customers.
She wanted banks to adopt advanced fraud prevention and detection mechanisms and ensure that the customers are further educated about safe banking practices.
Sitharaman directed banks to undertake consumer education measures for protection from malicious fraud calls and to make efforts for timely identification of accounts as fraud and their subsequent investigation.
Default recovery
Banks were also advised to put more effort into recovery from accounts declared as fraud and wilful default. She asked the lenders to monitor the early warning signals to check potential frauds.
Recognising that the effectiveness of legal action against defaulters before courts and tribunals largely depends on effective representation by lawyers and attorneys assisted by bank officials, Sitharaman called for a performance review of counsel representing PSBs to ensure better legal outcomes.
Sitharaman stated that the wilful defaults not only strain the banks’ financial health but also hamper the flow of credit in the economy and urged the PSBs to adopt responsible lending practices across the board.
Other issues related to cyber security were also deliberated in the meeting. The preparedness of all the PSBs in addressing cyber security risks was reviewed by the Finance Minister and PSBs were directed to ensure privacy of customer data.