Non-performing assets with public sector banks are on the decline, Finance Minister Arun Jaitley said on Tuesday, adding that public sector banks are expecting recoveries on loans to the tune of ₹1.8 lakh crore this financial year.
Speaking at a press briefing after an annual review meeting with the heads of public sector banks, Mr. Jaitley said “the light at the end of the tunnel” was visible in the context of NPAs.
The Insolvency and Bankruptcy Code and NCLT proceedings were having a positive effect on recoveries and prompting promoters to pay their dues before the legal process begins, the Minister said. The banks also said they expected credit growth to pick up over the year, he added.
“The public sector banks are expecting a recovery of about ₹1.8 lakh crore from the Insolvency and Bankruptcy Code (IBC) proceedings and from outside those proceedings,” Financial Services Secretary Rajiv Kumar said, a point reiterated by Mr. Jaitley.
“This year, and it’s still early days of the IBC, but already the impact is clearly visible,” Mr. Jaitley said.
‘PSU banks expecting credit uptick’
Mr. Jaitley said public sector banks were expecting stronger credit growth this financial year on the back of stronger growth in the economy.
“We are passing through a phase of good growth in the economy,” the Minister said at a press briefing following the annual review of public sector banks. “Consumption has moved up and there is growth in investment activity, so naturally the banking sector will also grow,” he added.
Stating that the NPAs with the public sector banks were declining, Mr Jaitley said, “The last quarter saw PS banks with a net profit. On the basis of the last quarter and what their expectations are looking ahead, the good news is that NPAs are on the decline because recoveries have picked up.”
The government has launched a Financial Inclusion Index to rank States.