Govt asks PSU banks to do forensic audit of defaulters

NPA CRACKDOWN

THE GOVERNMENT and the Reserve Bank of India are close to finalising a number of changes in rules to reduce the proportion of bad loans in the banking sector, a prerequisite to kick-starting the investment cycle and pushing growth.

Finance ministry sources told The Indian Express that the measures being finalised include tweaking the existing Joint Lenders Forum for faster resolution of NPAS (non-performing assets), a scheme for one-time settlement of bad debts and penal action for defaulters who have siphoned off loans taken for business purposes.

Sources said that stateowned banks have been asked to conduct a forensic audit of top 50 loan defaulters to separate genuine cases of business failure from those where funds have been diverted.

They said that Union Finance Minister Arun Jaitley held a meeting with top RBI officials and bankers last week, and a roadmap is being worked out to deal with the issue of NPAS in near and medium term.

While the government is unlikely to set up a state-owned Bad Bank to take over NPAS from state-owned banks in the near term, the Department of Financial Services has been asked to review the existing framework of private asset reconstruction companies over the next few months and submit a report. A largescale auction of bad debts is also being looked into by the government, said sources.