Bad loans by state-run banks worry Pranab
09 Jul 2011
Concerned over the growing portfolios of bad loans with public sector lenders, finance minister Pranab Mukherjee has asked these banks and financial institutions to devise strategies for containing and bringing down non-performing assets.
"It is an area of concern as between March 2010 and March 2011, gross NPAs have increased from Rs59,927 crore to Rs74,617 crore," Mukherjee said after meeting heads of public sector banks in New Delhi for an annual performance review.
"They (banks) should exert themselves to devise suitable strategies for containing and rolling back non-performing assets," he added.
"Growth of NPAs was one item on which detailed discussions have taken place and I have suggested to the public sector bank CMDs that you must not only apply your due diligence for the fresh sanction of the loans but also ensure the mechanism through which the NPA growth could be stemmed."
He noted with satisfaction that state-owned banks have witnessed significant credit growth of 22.44 per cent in the last financial year. However, there has been a moderation in the last quarter.
Considering that the investment needs of the infrastructure sector are increasing, he said, banks need to sustain and improve the flow of credit to the sector. Banks should gain more headroom for lending to infrastructure projects by making use of 'takeout finance' from IIFC.
