Date : 9.8.2016

Smaller loans don’t lead to NPAs, big ones do: Jaitley

Finance minister Arun Jaitley on Tuesday said the problem of non-performing assets (NPA) are predominantly linked to large trading and industrial advances, and are relatively less in case of smaller loans. Replying to a question in the Rajya Sabha, he said the RBI provides detailed norms to banks, outlining ways to deal with NPAs and the restructuring exercise. NPAs are loans that do not yield returns.

“As far as different sectors are concerned, there has been an experience that in case of smaller loans the level of NPAs have been lesser,” he added.

Stating that as of March 31, 2016, gross NPAs of public sector banks stood at ₹4.76 lakh crore, Jaitley said the RBI has already ordered an asset quality review of the banking system before stating the NPA status of banks.

RS passes bill

The Rajya Sabha on Tuesday passed a bill that seeks to amend four laws that, among other matters, seek to empower banks to take possession of collateral in the case of loan default, except for farm land. Earlier this month, the Lok Sabha, too, had passed the Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Bill, 2016. Four laws will, accordingly, be amended — Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (Sarfaesi), Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (RDDBFI), Indian Stamp Act, 1899, and Depositories Act, 1996.

“We cannot have a culture where somebody just takes loan and is under the assumption that it will now be the headache of the banks to recover the money, and banks should be answerable,” the finance minister said.