Government working on plan to curb NPAs in public sector banks

In Banking and Finance
November 12, 2015

The government is working on a detailed plan to tackle bad loans at public sector banks. NPAs (Non Performing Assets) curtail their ability to lend and restrain private investment. Thus posing a significant threat to the broader Indian economy. The government wants to kick start private investment, that a more radical and focused approach is needed to address the issue besides capital infusion in the long term. The plan is being discussed by Prime Minister’s Office and the finance ministry.

Steps taken by government to tackle NPAs:-

In August, the government had announced a seven-pronged revamp plan for public sector banks dubbed Indradhanush.
This is a scheme to deal with non-performing assets (NPAs) and a capital infusion plan of Rs 70,000 crore over four years, starting with Rs 25,000 crore in the current financial year.
The government is also keen to unveil a number of reform measures that lie in the executive’s domain before the winter session of Parliament starts on November 26.
A beginning had been made in this regard with the FDI policy revamp that was announced on November 10.

The Financial Stability and Development Council (FSDC), headed by finance minister Arun Jaitley, discussed rising bad loans in the banking sector and decided to set up a Resolution Corporation to deal with issues concerning closure of financial companies. Non-performing assets rose to Rs 2.67 lakh crore in March from Rs 2.40 lakh crore a year ago.