No loan waiver for capitalists: Jaitley

The government has not waived any loans of big NPA (non-performing asset) defaulters, Finance Minister Arun Jaitley said on Tuesday, dismissing rumour that loans of capitalists are being written off by banks.

In a blog, Jaitley said over the last few days, a rumour was being propagated regarding waiver of loans of capitalists by banks.

Observing that the time has come for the nation to be apprised of facts in this regard, he said one should ask at whose behest the loans, which have turned NPAs, were disbursed between 2008 and 2014 by public sector banks.

“The public needs to ask the rumour-mongers at whose behest or under whose pressure were such loans disbursed. They should also be asked that when these debtors delayed in repayment of their loans and interest thereon to public sector banks, what decision was taken by the then government,” the finance minister said.

Jaitley said rather than taking firm decision against debtors the then government relaxed the loan classification norms to keep defaulters as non-NPA accountholders.

The asset quality review (AQR) carried out for clean and fully provisioned balance sheets in 2015 revealed high NPA, he said.

As a result, Jaitley said, loans of about ~4,54,466 crore, which were actually fit to be NPA and were under the carpet, were recognised after intensive scrutiny under AQR.

“The government has not waived any loans of big NPA defaulters,” he said, adding under the new Insolvency and Bankruptcy Code, cases have been instituted in the National Company Law Tribunal for timebound recovery from 12 largest defaulters. These 12 defaulters account for NPAs totalling ~1.75 lakh crore.

Cases for the recovery of NPA dues from the assets of these big defaulters are under way at various stages.

Jaitley further said with the object of increase credit off-take and creation of jobs, the government has taken “the big decision” of capitalising state-owned banks.

Under this, with maximum allotment in the current year, capital increase of ~2.11 lakh crore would be effected within two financial years.

For receiving the capital, banks will have to carry out several reforms so that such situations do not recur, he added. Jaitley said through strong steps taken over the last three years, “not only have the problems received as legacy” been addressed but reforms for rebuilding the strength of public sector banks have been boosted.

The minister said the process of creation of strong and large banks began with the integration of State Bank of India, and the recapitalisation announced will bolster this process. “While honest businesspersons will be able to access loans from strong and reformed banks, strict and clear law and the all-round clean-up initiated by the government would result in a clean system in the country,” Jaitley added. Finance Minister Arun Jaitley on Tuesday said digital transaction was fast taking the place of cash being a predominant instrument for transactions with a series of government initiatives to formalise the economy.

“We had almost reconciled to the fact that the economy would be substantially informal. It’s only on its own strength that it will take decades or maybe, centuries to formalise itself and that no shake-up from the system was required. And that on its own pace would have taken an indefinite long time and we would have all waited till the cows came home for the economy to really formalise by itself. But then several policy initiatives that the government took one after the other have set off a chain reaction and that chain reaction is visible in various