Bankers need not have any fear while supporting good investment proposals: Jaitley

Finance Minister Arun Jaitley on Tuesday asked the lenders not to have any fear while supporting good investment proposals. He also exhorted banks to ensure clean lending.

“With the recent amendment to the Prevention of Corruption Act, there need not be any apprehension in the minds of bankers in supporting investments that are in the best interests of the economy, the nation and the banks,” Jaitley said, while addressing the Chief Executives and other whole-time Directors of Public Sector Banks (PSBs) at the annual review meeting in the Capital.

Jaitley’s remarks have come at a time when various investigating agencies are investigating against former bank officials in loan defaults. Even one former deputy Governor of RBI is facing investigation.

The Finance Minister underscored the need to have trust and confidence in the banking system as a necessary precondition for meeting the needs of the economy. He also exhorted banks to ensure clean lending and effective action in case of fraud and wilful default, to justify the trust reposed in banks. “Banks must strive to be seen always as institutions of clean and prudent lending,” he said.

The review meeting is taking place after good performance by public sector banks during the first three months (April-June) of the current fiscal. The losses have come down by 73.5 per cent to 16,617 crore from 62,682 crore during the last three months (January-March) of fiscal year 2017-18. During the period, banks’ operating profit rose to 36,632 crore from 34,329 crore, showing a growth of 11.5 per cent. Assets worth 36,651 crore were recovered during the period under consideration.

The Minister noted that the perception regarding the health of PSBs has become more positive as banks have posted positive results in terms of resolution, recovery, provisioning and credit growth. He said that the amendment of Insolvency and Bankruptcy Code (IBC) to debar wilful defaulters has had the unintended positive consequence of defaulting borrowers stepping forward to make payment in order to participate in the resolution process.

“A growing economy will also help banks grow in strength. Conversely, as lifelines of the economy, banks would need to build their strength to support the lending needs of a growing economy,” he said while highlighting the factors that would make for sustained high growth for India over the next decade.

Jaitley also flagged the need to assess and revisit the efficacy of the Debt Recovery Tribunal (DRT) mechanism, particularly in view of long lead time in disposal of cases. He underscored the need for expediting recovery through DRT mechanism, so that their original objective of speedy recovery proceedings is realised.

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