New Delhi:
Finance Minister Arun Jaitley's review meeting with the chiefs of public sector banks today is expected to create a turnaround road map on how banks - facing nearly 3.6 lakh crore worth non-performing assets (NPAs) - can become part of the India's growth story.
Bad debts top the agenda of the meeting at Vigyan Bhawan in Delhi.
The meet is the first since defaulter Vijay Mallya left India, frustrating the efforts of public banks to recover Rs 9,000 crore he owes them, and also after the government has put in place measures like the bankruptcy bill to help the banks.
On May 26, when the Modi government completed two years in power, finance minister, referring to this meet, had said, "I'm going to support all of them (banks) that's my first message and I am going to persuade them on banking, commercial and banking considerations."
"Start the recovery process where ever you (banks) can, which ever managements can't deliver, the managements must change," he had said.
The meet is being held against the backdrop of Public Sector Banks (PSBs) reporting second consecutive quarter of rising losses. Punjab National Bank is touching 55,000 crore of non-performing assets (NPAs) and private banks like Axis Bank is also anticipating a threat.
Banks are expected to clarify how much bad debts are still left on their balance sheets and how much fresh equity infusion will they need for a turn around.
Banks are feeling the heat as the Reserve Bank of India has asked them to clean up their books by March 2017.
Banks need to work out a strategy as the sectors responsible for large share of distress - steel, power sugar textile and infrastructure have witnessed relief efforts by the government.
Mr Jaitley said: "Five to six sectors of the economy were doing badly for various reasons as the UPA government went off to sleep."
Steel sector is high on the distress list of banks as over the last few years the Chinese steel had been coming at hugely cheaper price. The NDA government brought relief for the sector and the bank loans by introducing a minimum import price. The turning balance sheets of Indian steel manufacturers may soon create a situation in which the industry will start servicing the interest.
The finance ministry says that state discoms were distributing power below cost and banks were footing the bill. To stop this, states have been asked to issue bonds to banks.
The highway sector and sugar industry too have seen several revival measures to ease pressure on banks. The textile and infrastructure sectors are witnessing easing of rules for exit among other measures.
The government says it will continue to push for a more vigorous chasing of defaulters by banks.
"The NPAs have broadly climaxed though for a little while it may still go up but then it will start coming down," Mr Jaitley said.
The finance minister is expected to ask banks to use measures like the bankruptcy bill to improve the recovery process. Mr Jaitley may also highlight steps to streamline how bank heads are picked after the setting up of the Banks Board Bureau (BBB) headed by former Comptroller and Auditor General Vinod Rai.
The discussion is also likely to include consolidation of banks which may see the total number of banks shrink from existing 27 to around 10. Already the talks of SBI and associated banks merging to form a larger entity are in progress.
Mr Jaitley is also expected to discuss the progress made in PM Modi government's flagship schemes like Jan Dhan Yojana.
Bad debts top the agenda of the meeting at Vigyan Bhawan in Delhi.
The meet is the first since defaulter Vijay Mallya left India, frustrating the efforts of public banks to recover Rs 9,000 crore he owes them, and also after the government has put in place measures like the bankruptcy bill to help the banks.
On May 26, when the Modi government completed two years in power, finance minister, referring to this meet, had said, "I'm going to support all of them (banks) that's my first message and I am going to persuade them on banking, commercial and banking considerations."
"Start the recovery process where ever you (banks) can, which ever managements can't deliver, the managements must change," he had said.
The meet is being held against the backdrop of Public Sector Banks (PSBs) reporting second consecutive quarter of rising losses. Punjab National Bank is touching 55,000 crore of non-performing assets (NPAs) and private banks like Axis Bank is also anticipating a threat.
Banks are expected to clarify how much bad debts are still left on their balance sheets and how much fresh equity infusion will they need for a turn around.
Banks are feeling the heat as the Reserve Bank of India has asked them to clean up their books by March 2017.
Banks need to work out a strategy as the sectors responsible for large share of distress - steel, power sugar textile and infrastructure have witnessed relief efforts by the government.
Mr Jaitley said: "Five to six sectors of the economy were doing badly for various reasons as the UPA government went off to sleep."
Steel sector is high on the distress list of banks as over the last few years the Chinese steel had been coming at hugely cheaper price. The NDA government brought relief for the sector and the bank loans by introducing a minimum import price. The turning balance sheets of Indian steel manufacturers may soon create a situation in which the industry will start servicing the interest.
The finance ministry says that state discoms were distributing power below cost and banks were footing the bill. To stop this, states have been asked to issue bonds to banks.
The highway sector and sugar industry too have seen several revival measures to ease pressure on banks. The textile and infrastructure sectors are witnessing easing of rules for exit among other measures.
The government says it will continue to push for a more vigorous chasing of defaulters by banks.
"The NPAs have broadly climaxed though for a little while it may still go up but then it will start coming down," Mr Jaitley said.
The finance minister is expected to ask banks to use measures like the bankruptcy bill to improve the recovery process. Mr Jaitley may also highlight steps to streamline how bank heads are picked after the setting up of the Banks Board Bureau (BBB) headed by former Comptroller and Auditor General Vinod Rai.
The discussion is also likely to include consolidation of banks which may see the total number of banks shrink from existing 27 to around 10. Already the talks of SBI and associated banks merging to form a larger entity are in progress.
Mr Jaitley is also expected to discuss the progress made in PM Modi government's flagship schemes like Jan Dhan Yojana.
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