The Hindu Business Line : `PSBs solely responsible for monitoring credit'

The Union Finance Minister, Mr P. Chidambaram, has said that there is no proposal to set up "another layer" of supervision for monitoring the advances of public sector banks (PSBs).

He was responding to a question in the Lok Sabha on Friday whether the Government was planning any "effective mechanism" to monitor the end-use of advances made by PSBs. It was pointed out to the Minister that loans taken for particular purpose could be diverted to other purposes like stock markets etc.

"The effective mechanism is the bank. The bank has to monitor the advances made by it. The board of directors is squarely responsible for monitoring the credit. There is no proposal to set up another layer," Mr Chidambaram told the Lok Sabha.

Outstanding advances

The outstanding gross advances of PSBs stood at Rs 11.35 lakh crore as on March 31, 2006. Non-Performing Assets stood at Rs 42,106 crore, which is about 3.7 per cent of gross advances as on March 31, 2006.

The Finance Minister also said PSBs had in fiscal 2005-06 taken a hit of Rs 8,333 crore due to compromise settlements and write offs.

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