New Delhi-Indian state-run banks have collectively made an operating profit of almost Rs 35,000 crore this fiscal, but the massive provisioning for bad debts has pared their net profit down to Rs 222 crore, Finance Minister Arun Jaitley said on Friday.
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Describing the bad loan situation of the public sector banks as still challenging, finance minister Arun Jaitley on Friday said “greater initiative” is needed by PSU banks in cases where it is hard to find buyers or “alternative promoters” for selling stressed assets.
Suggestions on issues such as non-performing assets and the expansion and consolidation of banks made during the last such review on June 6 will also be taken up. RBI is a responsible organisation, Jaitley said, adding, “we should wait for its judgement and we should trust its judgement”.
“The finance minister will also review the progress of credit, growth and asset quality, especially with regard to priority sectors lending, including credit flow to agriculture, insurance sector, micro and small enterprises, minorities, SC and ST, education and housing loan”, the ministry said.
Some movement forward is also expected in how to empower the banking system further – and encourage quick decision-making on bonafide matters – so that the issue of non-performing assets can be dealt with and fresh loans be disbursed in an environment that does not prove hostile later.
Jaitley said there are mechanisms for buying stressed assets and if there are companies within the country, whether public or private sector, which think it is right time to buy at right value, they obviously will make commercial judgement.
Gross NPAs of the PSBs have surged from 5.43 per cent (Rs 2.67 lakh crore) in 2014-15 to 9.32 per cent (Rs 4.76 lakh crore) in 2015-16 of the total advances.
He described the NPAs situation as being “not static or permanent”. “Therefore, the moment that you see the revival of a sector, a lot of the provisioning itself would get deprovisioned, and the account itself would get upgraded”.
“After that the banks will give their report to the Department of Financial Services”, he added.
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The review meeting would be continuing for the rest of the day, Jaitley said.
