The Union Minister of Finance and Corporate Affairs, Arun Jaitley said the Formalisation of the Indian Economy through the Insolvency and Bankruptcy Code (IBC), GST, demonetisation and digital payments have enabled better assessment of financial capacity and risks, and coupled with inclusive growth through massive financial inclusion, has unlocked purchasing power which will drive India's growth. The Finance Minister said that this should help India sustain a growth rate of around 8%. A growing economy will also help banks grow in strength, he added. Conversely, as lifelines of the economy, banks would need to build their strength to support the lending needs of a growing economy. Jaitley was addressing the Chief Executives and other whole-time Directors of Public Sector Banks (PSBs) at the Annual Review Meeting of the PSBs in New Delhi today.
While noting the positive results from the IBC mechanism, the Finance Minister also flagged the need to assess and revisit the efficacy of the Debts Recovery Tribunal (DRT) mechanism, particularly in view of long lead times in disposal of cases. He underscored the requirement for expediting recovery through the DRT mechanism, so that their original objective of speedy recovery proceedings is realised.
The Finance Minister noted that the perception regarding the health of PSBs has become more positive as banks have posted positive results in terms of resolution, recovery, provisioning and credit growth. The Finance Minister said that the Amendment of IBC to debar wilful defaulters has had the unintended positive consequence of defaulting borrowers stepping forward to make payment in order to participate in the resolution process.
The Finance Minister also noted the continued relevance of PSBs in the Indian context, in view of their development contributions and to support financial inclusion. In this regard, he noted that support for non-retail banking from other lenders continues to be insufficient. The Finance Minister underscored the need to trust and confidence in the Banking System as a necessary precondition for meeting the needs of the economy.
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