‘Work­ing on plan to re­build ca­pac­ity of bank­ing sec­tor’

The Hitavada - - HOME & ABROAD - By Lalit K Jha

FI­NANCE Min­is­ter Arun Jait­ley has said the Govern­ment, faced with a “catch22 sit­u­a­tion” over the is­sue of non­per­form­ing as­sets, is work­ing on a plan to re­build the ca­pac­ity of In­dia’s bank­ing sec­tor so as to sup­port growth.

Jait­ley, who is on a week-long visit to the US to at­tend the an­nual meet­ings of the In­ter­na­tional Mone­tary Fund and the World Bank, also said that re­form­ing the bank­ing sys­tem is the top agenda of the Govern­ment.

“To­day, with global growth turn­ing around, we are work­ing to put up an ac­tual plan in play to deal with the bank­ing sit­u­a­tion, which is top of our agenda. We need to re­build the ca­pac­ity (of the bank­ing sec­tor),” Jait­ley told stu­dents of Har­vard Univer­sity in Bos­ton. “I in­her­ited a bank­ing sys­tem whose monies were ly­ing in non-per­form­ing as­sets... Are un­able to ser­vice the debt. We are faced with a catch22 sit­u­a­tion as to how do we im­prove the ca­pac­ity of the banks so that they can sup­port growth,” he said.

So, all th­ese fac­tors to­gether ad­versely im­pacted the pri­vate sec­tor, the Min­is­ter said. Gross non-per­form­ing as­sets (NPA) of the pub­lic sec­tor banks rose to Rs 6.41 lakh crore at the end of March 2017 as against Rs 5.02 lakh crore a year ago, ac­cord­ing to Fi­nance Min­istry data.

Jait­ley, how­ever, also noted that big­ger en­ter­prises did not suf­fer, be­cause they ap­proached the bond mar­ket and for­eign fund­ing which were avail­able at much cheaper rates. They did not had to go to th In­dian banks.

It is small and medium-sized en­ter­prises that need the sup­port of the bank­ing sys­tem, Jait­ley said, not­ing that SMEs are huge job cre­ators.

“That’s where the prob­lem re­ally is as far as the pri­vate sec­tor is con­cerned,” Jait­ley said.

(PTI)

Fi­nance Min­is­ter Arun Jait­ley de­liv­ers the Har­vard Mahin­dra lec­ture at the Har­vard South Asia In­sti­tute in Bos­ton on Wed­nes­day.

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