Finance minister Arun Jaitley is slated to meet heads of public sector banks (PSBs) on June 12 to review their financial performance.
He will also take stock of bad loans, recovery efforts made and other measures being taken to clean up bank balance sheets.
The minister will also discuss the pending cases before the joint lenders’ forum (JLF), turnaround plans for the banks and their targets for the financial year. Progress on Stand Up India and promotion of digital payments are also part of the agenda. The meeting assumes significance, as it will be the first after promulgation of the ordinance changing the Banking Regulation Act, 1949, earlier this month. NPAs of PSBs have gone past the Rs7-lakh-crore mark, the bulk of which are in sectors such as power, steel, road infrastructure and textiles.
With stock prices on the mend, the meeting will also discuss ways in which PSBs can tap markets to raise funds and ease pressure on the exchequer of pumping in capital in line with the Indradhanush plan.
Going by the scheme, PSBs need to raise Rs 1.10 lakh crore from markets, including follow-on public offer, to meet Basel-III requirements that kick in from March 2019. The government also empowered the RBI to ask banks to initiate insolvency proceedings to recover bad loans and promised more measures to resolve the NPA crisis.
The RBI also made substantial changes in related norms and also warned banks of monetary penalty for missing NPA resolution timelines. Jaitley had said the ordinance empowered the RBI to issue “directions to any banking company or banking companies to initiate insolvency resolution process in respect of a default under the provisions of the Insolvency and Bankruptcy Code (IBC), 2016.”
