Won't write off any bad loans, defaulters won't be spared: Arun Jaitley

Won't write off any bad loans, defaulters won't be spared: Arun Jaitley

Won't write off any bad loans, defaulters won't be spared: Arun Jaitley

The government will soon set up an expert group to look into consolidation of public sector banks, as the country needs stronger rather than a large number of banks, finance minister Arun Jaitley said on Saturday.

Consolidation among state-run banks has been on the agenda of successive governments but never fructified as lack of political will, lack of synergy among bank systems as well as strong opposition from the bank unions stalled the process.

"No defaulter will be spared", he warned.

"You need strong banks rather than numerically a larger number", Jaitley said.

Mr. Jaitley also said the government is considering strengthening the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest, SARFAESI Act and Debt Recovery Tribunals, DRT, to deal with the problems of stressed assets that are estimated at around Rs 8 lakh crore. "It is in very advanced stage...It has been long standing demand, and is (under) an active consideration", the minister said.

"The discussions will help us in giving policy direction", he said, adding that suggestions were also made on amending the SARFESI Act as well as the Debt Recovery Tribunals.

The panel would also deliberate whether weak banks should be merged with stronger ones or regional banks.

Jaitley said consolidation is Budget announcement and it will get "top most priority" and the "Experts' Group would be constituted immediately".

"We are anxiously waiting for report of the Joint Committee on Bankruptcy and Insolvency Law".

In a recent presentation before industry, Reserve Bank of India Deputy Governor S.S. Mundra had said that the total bad exposures of banks, including rescheduled and written-off assets, was 17 percent of deposits as on September 15 a year ago, up from 13.4 percent in March 2013.

The Gyan Sangam, which was first held in Pune past year and addressed by Prime Minister Narendra Modi, debated issues such as restructuring and consolidation in the state-owned banks, recovery of NPAs, sale of non-core assets and credit growth.

Participants in this bankers' retreat include Anjuli Chib Duggal, secretary, department of financial services (DFS), regulators, officials of the ministry of finance, top management of all public sector banks (PSBs), insurance companies and financial institutions (FIs). Speaking ahead of the Gyan Sangam, Sinha said the Budget for FY17 has provided Rs 25,000 crore for recapitalization of PSU banks.

The second edition looked at transformation with reference to the asset quality review with the central bank.

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