NEW DELHI: Finance Minister Arun Jaitley took the fight to critics of the newly promulgated ordinance on wilful defaulters on Tuesday, while refuting claims that the NDA government had waived loans of big corporates. The minister, who made his arguments on a blog post, said that the government has been taking firm action against defaulters and is making efforts to strengthen banks by recapitalising them.
“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 PSBs, what decision was taken by the then government,” Jaitley pointed out.
Observing that the government has not waived any loans of big NPA defaulters, he said the time has come for the nation to know the facts. “One should ask at whose behest the loans which have turned NPAs were disbursed between 2008 and 2014 by public sector banks (PSBs),” the minister said.
As a result of the previous government’s lax treatment of debtors, Jaitley said much of the NPA accounts had been ignored. An asset quality review (AQR) of loans conducted in 2015 revealed high NPA. “Loans of about Rs 4,54,466 crore, which were actually fit to be NPA and were under the carpet, were recognised after intensive scrutiny under AQR,” Jaitley pointed out.
Jaitley also highlighted the steps taken to rein in the bad loan issue through the new Insolvency and Bankruptcy Code, with 12 of the largest defaulter (accounting for Rs 1.75 lakh crore of NPA) facing cases at the National Company Law Tribunal for time-bound recovery.
“At the same time, banks were given necessary capital so that public sector banks become strong and capable of contributing to the nation’s development. The reason for giving capital to banks is that these banks may become mazboot, ie, strong, rather than mazboor, ie, hard-pressed,” he said. Jaitley also said that with the current re-capitalisation plan, credit off-take and job creation would get a boost.