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Go after big loan defaulters: FM to banks

Concerned over defaults by big borrowers, Chidambaram said the government is monitoring the top 30 NPA accounts in each PSU bank

Published: 23rd October 2013 11:23 AM  |   Last Updated: 23rd October 2013 11:23 AM   |  A+A-

Expressing concern at rising non-performing assets (NPAs) of public sector banks, Finance Minister P Chidambaram on Tuesday asked them to create separate verticals to recover money from defaulters.

Chidambaram said the government had put as many as 30 top NPA accounts in each PSU banks under watch and wanted that these verticals to be headed by officials of general manager rank.

“It’s a matter of concern that big borrowers (`1 crore and above) are the biggest defaulters. Large borrowers, that is where bulk of the NPAs are coming from,” the Finance Minister rued.

Chidambaram made these observations while addressing the Press after a near three-hour-long meeting with heads of different public sector banks and said “NPAs are a function of the economy.”  He was hopeful that the situation would improve with economic recovery.

He said even if one rupee is recovered it is one rupee earned and added that those who have small exposures to loans are the ones who diligently pay back their loans.

“Recoveries are taking place, but I am not happy,” he said.

Citing statistics, he said NPAs amounted for as much as 14 per cent in the year 2000 while it came down to 2.09 per cent between 2006-2010 and as of June this year the gross NPAs stood at 3.89 per cent. The rise in NPAs, he said, was creeping up because of the economic down turn.

Chidambaram, however, expressed satisfaction over credit growth by PSU banks so far and expressed hope that it will remain “satisfactory” in the remaining part of the fiscal.

On the housing loan front, he said it recorded a healthy growth in the first and second quarters and rose by 42 per cent and 61 per cent, respectively.

He also hoped that PSU banks will exceed the target of `7 lakh crore earmarked for agriculture credit.



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