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Monday, Feb 18, 2002

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Budget must address NPA problem: CII

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NEW DELHI, Feb. 17

CALLING for measures for financial sector reforms in the Union Budget, the Confederation of Indian Industry (CII) has pointed out that with the sector directly under the administration of the Finance Ministry, the Budget can not only announce reform measures but also implement them.

The chamber's recommendations for the Budget have stressed on the need for proper provisioning of measures and resolving the NPA problem, among others.

On the operational front, CII has emphasised on the need for setting up a pilot Asset Reconstruction Company (ARC) more or less in line with the recommendations of the Verma Committee.

While this would help in taking some of the NPA burden of the banking system, it has to be coupled with setting a time-table for the merger and/or privatisation of weak public sector banks. On the tax front, Section 36(1)(vii) of the Income-Tax Act allows deduction for these provisions made by public sector banks and financial institutions for bad and doubtful debts.

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