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Rediff.com  » Business » Take firm steps to recover loans: FM tells banks

Take firm steps to recover loans: FM tells banks

March 18, 2013 13:54 IST

P ChidambaramConcerned over rising bad loans, Finance Minister P Chidambaram today asked banks to take firm steps to recover loans saying the country cannot afford to have ‘affluent promoters and sick companies’.

"We wish banks take firm steps to recover NPAs. Promoters have to bring in additional money and companies have the duty to pay back loans," Chidambaram said.

He was talking to reporters after meeting the heads of PSU banks and financial institutions in New Delhi. The Finance Minister said recovery has improved in the past one or two months and banks will take more steps to deal with the rising NPAs without hurting the industry.

"We cannot have an affluent promoter and a sick company. Promoters must bring in money. . . Without doing anything that will kill the business of industry, banks will have to take steps to recover the NPAs," he said.

Gross NPAs of PSU banks have risen from Rs 71,080 crore (Rs 710.8 billion) as on March 2011, to Rs 1.55 lakh crore (Rs 1.55 trillion) as on December 2012.

He further said that stalled projects in sectors like power, coal, iron, steel and road transport is a matter of worry.

As many as 215 projects with an investment of Rs 7 lakh crore (Rs 7 trillion) are currently stalled and banks have disbursed about Rs 54,000 crore (Rs 540 billion) loan towards it, Chidambaram said.

As far as new projects are concerned, he said, they are also in the same five sectors.

There are 126 new projects for which the outlay is Rs 3.55 lakh crore (Rs 3.55 trillion) and amount sanctioned by banks against these was Rs 43,000 crore (Rs 430 billion).

"Real problem is in road and power. “There are 68 new projects in the road sector. “There are 40 new projects in the power sector. We have to get them going," he said, adding that the ministries concerned would look into the matter so that projects are accelerated.

Chidambaram said the government has identified the main reasons due to which projects were stalled.

"The main reasons are coal linkage, environment clearances, land acquisition," he said adding there is now a greater degree of confidence than what was there 6 months ago.

"Now that we have resolved some issues relating to environment clearance, and NHAI, more coal blocks are being made available. . . Ministry will start taking sectoral meetings with state governments and promoters to see how we can move these forward," he said.

On liquidity situation, Chidambaram said the Reserve Bank Governor will take steps in the monetary policy review on Tuesday.

"The RBI Governor is also aware of issues of liquidity and tomorrow is the monetary policy and am sure he will address the issue of liquidity," he said.

Replying to a question on charges of money laundering by certain employees of three private sector banks, Chidambaram said the RBI and the Finance Ministry are looking into the issue.

"Secretary, Department of Financial Services is looking at it closely. “RBI is looking at it closely. They (banks) themselves have instituted enquiries. Let's give them a Little time to come up with the report of the enquiry," he added.

On the proposed all women bank, Chidambaram said the expert committee headed by M B N Rao for the purpose met for the first time on Saturday and the panel will give a blueprint on the bank by April end.

The Finance Minister further said all PSU banks have also shown interest in opening all-women branches.

In next six months, he said, all state-run banks will have such branches.

Image: P Chidambaram 

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