Steps on bad loans taken to clean up UPA mess: Jaitley

NEWDELHI: Finance minister Arun Jaitley on Tuesday defended recent steps taken by the government to tackle bad loans in the Indian banking system and blamed aggressive lending during the years the United Progressive Alliance (UPA) was in power for the pile-up of toxic assets.

In a blog, the finance minister also defended amendments to the Insolvency and Bankruptcy Code, 2006 (IBC) through an ordinance aimed at keeping wilful defaulters away from regaining control of their assets.

The government has been criticised by opposition parties for introducing amendments to IBC through an ordinance. The ordinance, which came into effect last week after receiving the President’s signature, bars errant promoters of defaulting companies as well as guarantors to the debtor, directors in the companies that are disqualified and those with loans classified as NPAs for at least a year from regaining control of assets being sold under bankruptcy process.

“Government has not waived any loans of big NPA defaulters. On the contrary, under the new Insolvency and Bankruptcy Code brought by the Government, cases have been instituted in the National Company Law Tribunal (NCLT) for time-bound recovery from 12 largest defaulters in six to nine months, in NPA cases of ~1.75 trillion. Cases for the recovery of NPA dues from the assets of these big defaulters are under way at various stages,” he said.

Jaitley also said the government’s massive ~2.11 trillion recapitalisation plan for staterun banks announced last month will help strengthen their balance sheets. Bad loans of staterun banks almost tripled to Rs7.3 trillion as of June 2017, from ~2.8 trillion in March 2015 after the Reserve Bank of India initiated an asset quality review.