Bulk of NPAs arose out bank loans before Apr 2014: Jaitley
The bulk of NPAs of banks have arisen out of loans given before April 1, 2014, due to aggressive lending and without proper risk assessment and even without being backed by securities, the government on Tuesday said in the Rajya Sabha, reports PTI.
Replying to questions on rising NPAs of banks, Finance Minister Arun Jaitley made it clear that the government has not written off any bank loan and the liability of the borrowers for repayment of these loans remained.
“One thing is clear that there has been an aggressive lending practice and at times laxity and at times lack of risk assessment as far as grant of loans are concerned. And, that is why a very large number of these loans became NPAs. Many of them are not backed by adequate securities also,” he told the Upper House during the Question Hour.
“Qua the borrower, the liability remains. But the banks change the identity of the loan to ensure that income tax relief is sought by the bank. One should clear this misconception from the mind that the government or the banks have waived of Rs 55,000 crore,” he told the members.
To a question by SAD member Naresh Gujral on why a forensic audit of big loan defaulters cannot be ordered, Jaitley said “you cannot have a fishing inquiry into a transaction to find out what went wrong”.
Whenever specific facts have come to notice as far as banking industry is concerned, he said both the regulator and banks and the investigative agencies have been accordingly taking action from time to time.
Noting that the NPA debate will never end, former Finance Minister P Chidambaram asked whether performing loans as on March 31, 2014, have become non-performing later and whether that is a scam.
Taking on record the minister’s claim that earlier the regulation was lax and the asset regulation value has now been made stricter, he asked whether the minister has the data now or will he furnish it to the House later as to how many loans given by banks after April 1, 2014 have become NPA today.