Jaitley also says states offering farm loan waivers will have to generate funds from their own resources
Union Finance Minister Arun Jaitley said on Monday that the Reserve Bank of India (RBI) was at “a fairly advanced stage” of preparing a list of borrowers from whom non-performing assets (NPAs) of public sector banks could be recovered under the Insolvency and Bankruptcy Code.
The move, he said, would help be leaguered public sector banks (PSBs) recover part of their NPAs, estimated at over Rs 6 lakh crore. Jaitley´s remarks came after he,along with RBI and finance ministry officials, held a meeting with the heads of PSBs and took stock of problems affecting the lenders.
“Under the new Ordinance issued, the RBI is atafairly advanced stage of preparing a list of those debtors where a resolution is required through the Insolvency and Bankruptcy Code (IBC) process.You will be shortly hearing about it,” he said.
The Centre issued an Ordinance last month by amending the Banking Regulation Act, to empower the central bank to recover mounting NPAs of the state owned banks.The
Ordinance essentially empowers the RBI to ask banks to initiate insolvency resolution proceedings for bankruptcy code cases and recover bad loans.
Jaitley said the meeting did not discuss the issue of consolidation in the banking space, but added it was being “actively considered”.He refused to divulge any names due to price sensitiveness.
On farm loan waivers being considered by a Bharatiya Janata Party (BJP)ruled states, the minister said resources would have to be by the states themselves and that the would not be part of it. Uttar Pradesh and have already announced the loan subject to certain conditions.
RBI Deputy Governor SS Mundra, attended the meeting, said an internal committee had been constituted for accounts to be actively considered resolution. Mundra said the RBI was collecting information from banks on certain large accounts action points.
“I think, soon some of the points will emerge from that,” he added.About 81 cases have been filed under the and Bankruptcy Code.Of these 18 have been initiated by financial creditors.
“These are already before the National Company Law Tribunal (NCLT) and sinceabulk of the NPAs, about 70%, are either in consortium or in multiple banking arrangement, the speedy resolution is required,” Jaitley said.He said a few bankers expressed apprehensions about the infrastructure available for enforcement under the NPA ordinance.
The two hour meeting saw discussions on issues such as financial position of PSBs, NPA resolution, review of all financial inclusion schemes, and cyber security. NPAs have been eating into the net profits of PSBs.
For instance, banks made a stable operating profit of Rs 1.5 lakh crore in 2016-17, but net profit was only ~574 crore due to various provisioning requirements, Jaitley said.
After the merger of State Bank of India with its subsidiaries, the government is looking at the next phase of consolidation in the public sector bank space.“We are actively moving in that direction.I can´t give you further details as these are price sensitive information.
But you can take it that there is movement in that direction,” Jaitley said. Government´s policy think tank Niti Aayog is learnt to be working on the consolidation road map for PSBs by studying their financial health, NPA position and geographical reach, and is likely to submit the report within a month.
On the farm debt waiver issue, Jaitley said, “We have already made the position clear that states that want to go in for these kind of schemes will have to generate funds from their own resources.Beyond that, the central government has nothing more to say.”After the merger of State Bank of India with its subsidiaries, the government is looking at the next phase of consolidation in the public sector bank space
Business Standard New Delhi, 13th June 2017
Union Finance Minister Arun Jaitley said on Monday that the Reserve Bank of India (RBI) was at “a fairly advanced stage” of preparing a list of borrowers from whom non-performing assets (NPAs) of public sector banks could be recovered under the Insolvency and Bankruptcy Code.
The move, he said, would help be leaguered public sector banks (PSBs) recover part of their NPAs, estimated at over Rs 6 lakh crore. Jaitley´s remarks came after he,along with RBI and finance ministry officials, held a meeting with the heads of PSBs and took stock of problems affecting the lenders.
“Under the new Ordinance issued, the RBI is atafairly advanced stage of preparing a list of those debtors where a resolution is required through the Insolvency and Bankruptcy Code (IBC) process.You will be shortly hearing about it,” he said.
The Centre issued an Ordinance last month by amending the Banking Regulation Act, to empower the central bank to recover mounting NPAs of the state owned banks.The
Ordinance essentially empowers the RBI to ask banks to initiate insolvency resolution proceedings for bankruptcy code cases and recover bad loans.
Jaitley said the meeting did not discuss the issue of consolidation in the banking space, but added it was being “actively considered”.He refused to divulge any names due to price sensitiveness.
On farm loan waivers being considered by a Bharatiya Janata Party (BJP)ruled states, the minister said resources would have to be by the states themselves and that the would not be part of it. Uttar Pradesh and have already announced the loan subject to certain conditions.
RBI Deputy Governor SS Mundra, attended the meeting, said an internal committee had been constituted for accounts to be actively considered resolution. Mundra said the RBI was collecting information from banks on certain large accounts action points.
“I think, soon some of the points will emerge from that,” he added.About 81 cases have been filed under the and Bankruptcy Code.Of these 18 have been initiated by financial creditors.
“These are already before the National Company Law Tribunal (NCLT) and sinceabulk of the NPAs, about 70%, are either in consortium or in multiple banking arrangement, the speedy resolution is required,” Jaitley said.He said a few bankers expressed apprehensions about the infrastructure available for enforcement under the NPA ordinance.
The two hour meeting saw discussions on issues such as financial position of PSBs, NPA resolution, review of all financial inclusion schemes, and cyber security. NPAs have been eating into the net profits of PSBs.
For instance, banks made a stable operating profit of Rs 1.5 lakh crore in 2016-17, but net profit was only ~574 crore due to various provisioning requirements, Jaitley said.
After the merger of State Bank of India with its subsidiaries, the government is looking at the next phase of consolidation in the public sector bank space.“We are actively moving in that direction.I can´t give you further details as these are price sensitive information.
But you can take it that there is movement in that direction,” Jaitley said. Government´s policy think tank Niti Aayog is learnt to be working on the consolidation road map for PSBs by studying their financial health, NPA position and geographical reach, and is likely to submit the report within a month.
On the farm debt waiver issue, Jaitley said, “We have already made the position clear that states that want to go in for these kind of schemes will have to generate funds from their own resources.Beyond that, the central government has nothing more to say.”After the merger of State Bank of India with its subsidiaries, the government is looking at the next phase of consolidation in the public sector bank space
Business Standard New Delhi, 13th June 2017
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