Big people's bad loans a big challenge to banks: Arun Jaitley

It is the ''big people'' and not the small borrowers who often default on loans, causing a surge in banks' non-performing loans and recovery of loans from these "big people" has become a "big challenge" for banks, finance minister Arun Jaitley has said.

"Wherever small borrowers are taking loans from banks, there is lesser NPA. NPA is low where smaller amount of loans taken for agricultural and smaller businesses and even in MUDRA scheme, the NPAs are at miniscule scale.

"Whatever big NPAs are there in the big banks, that are not because of small people, but because of big people (defaulters) and today it has become a challenge how to recover that money from these people," said Jaitley.

Jaitley, who was in Pune to attend the centenary completion celebrations of Pune District Central Co-operative Bank (PDCC).

In his speech, the NCP chief Sharad Pawar, who has been associated with the bank for the last 50 years, however, said that PDCC has zero per cent NPA.

The finance minister added that whatever may be the excuses being offered by these defaulters, it must be remembered that banks play an important role in the growth of the country as it offers loans to businesses, farmers and students, but if people choose to sit on loans the banks' capacity to lend gets affected, which would harm the economy.

"For the first time, government is taking steps to take these big people to insolvency so that the recovery can be done and that money can be utilised for the growth of the rural sector," he said.

Jaitley lauded the efforts of PDCC and its administrators and members for sustained good performance of the bank and said that the model of PDCC should be replicated in other parts of the country.

He praised Pawar for his contribution to the farming sector and also said that he rises above the party politics and gives his inputs to the government, when it comes to national interest.

Pawar, in his speech, spoke about the success of PDCC bank for last 100 years and said it is one of the few banking institutions in the country which has zero per cent NPA.

"For all these years, the bank is providing loans for agriculture, dairy businesses and taught the borrowers to repay the loans.

"When commercial and nationalised banks turned their backs on the farmers when they were in problem, it is the cooperative banks like PDCC that have helped these farmers," he said.

Maharashtra Chief Minister Devendra Fadnavis in his speech said that the state government is scrutinising applications of farmers for farm loan waiver and by October, the government will start crediting the amount in the farmers account.