Finance Minister Arun Jaitley is hoping that public sector banks will be able to control surging bad debts (non-performing assets) in the next few quarters. As on June 30, NPAs had surged to over 6 per cent against 5.2 per cent at the end of March 31, 2015.

“The NPAs are wholly unacceptable. They reached this level partly because of indiscretion, partly because of inaction, and partly because of the challenges some sectors of the economy are facing,” Jaitley said during an event to mark the 109{+t}{+h} foundation day of Indian Bank here on Friday.

He said an all-out effort has been launched to bring the NPAs down.

“Efforts by bank administrations, efforts by the government to infuse more capital, the effort to get more finance by divesting while retaining certain minimum share of government holdings, and then greater discretion and, more importantly, addressing the concerns of each sector (such as steel, power, discoms, highways, which are high-NPA generating sectors),” he said.

The Finance Minister said the reasons for the rising NPAs were partly domestic and partly external. “Now, each of these sectors is being addressed one by one. I have not the least doubt that over the next few quarters, the banks will be able to address this challenge,” he said. Last week, the government had announced a comprehensive reform roadmap for the banking sector, including steps to bring down bad debts.

Payments bank On payments bank, Jaitley said their introduction will change the banking habits of people — they will change the way people think, the way they keep money and where they keep it, as also the way they pay. The central bank on Wednesday gave in-principle approval to 11 entities, including Reliance Industries and India Post, to set up payments banks. Such banks are slightly different from normal commercial banks in that they can accept deposits but cannot lend.

Earlier, Jaitley launched 109 branches of Indian Bank. With this, the bank’s total branch strength has crossed 2,500.

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