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Public sector banks (PSBs) have set a target to recover ₹1.8 lakh crore in unpaid loans this fiscal, which is more than double the actual recovery in FY18.
The target was set during a meeting that Finance Minister Arun Jaitley held here on Tuesday with bankers, where he reviewed the performance of 21 PSBs.
Jaitley asked the lenders not to shy away from supporting good investment proposals even as he exhorted them to ensure clean lending.
Recovery picking up
Speaking to the media after the day-long meeting, Jaitley said bad debts are on a decline while recovery is picking up.
During the first three months of this fiscal, for which key performance indicators are available, the losses came down by 73.5 per cent to ₹16,617 crore from ₹62,682 crore in Q4 of FY18, he said.
During the quarter, banks’ operating profit rose to ₹36,632 crore from ₹34,329 crore, showing a sequential growth of 11.5 per cent. Assets worth ₹36,651 crore were recovered during the period.
Jaitley said PSBs have been facing challenging times for several years now, with lending hamstrung by the rising NPAs. But after the introduction of the Insolvency and Bankruptcy Code (IBC), which calls for an auction of assets of defaulting entities, recoveries have picked up, he added.
“We are passing through a phase of good growth as far as the economy is concerned. Consumption has moved up and, therefore, banking activity is bound to pick up,” he said.
Bankers have requested the government to relax the conditions of Prompt Corrective Action (PCA) and asked that more capital be made available to them. At present, 12 out of 21 PSBs are under PCA, which restricts their ability to lend.
The government has assured early resolution through due processes. Banks have also been told about continuous capital support.
Earlier, in his opening remarks, Jaitley said that 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 interest of the economy, the nation and the banks.
He also exhorted banks to ensure clean lending and effective action in cases 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.
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