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Govt working on plan to rebuild capacity of banking sector: Arun Jaitley

Jaitley also refuted the notion that private sector is not expanding

Press Trust of India  |  Washington 

Arun Jaitley

Minister has said the Indian is working on a plan to rebuild the capacity of the sector so that it could support growth. Jaitley, who is on a week-long visit to the US to attend the annual meetings of the International Monetary Fund and the World Bank, also said that reforming the system is the top agenda of the "Today, with global growth turning around, we are working to put up an actual plan in play to deal with the situation, which is top of our agenda. We need to rebuild the capacity (of the sector)," Jaitley told students of University in Boston. "I inherited a system whose monies were lying in non-performing assets...are unable to service the debt. We are faced with a catch-22 situation as to how do we improve the capacity of the banks so that they can support growth," he said. So, all these factors together adversely impacted the private sector, the minister said. Jaitley, however, also noted that bigger enterprises did not suffer, because they approached the bond market and foreign funding which were available at much cheaper rates.

They did not had to go to th Indian banks. It is small and medium-sized enterprises that need the support of the system, Jaitley said, noting that SMEs are huge job creators. "That's where the problem really is as far as the private sector is concerned," Jaitley said. Responding to a question, Jaitley refuted the notion that private sector is not expanding. "Expansion of private sector is taking place. The last quarter, which was otherwise not encouraging, indicated that the investment graph itself has turned positive. A lot of investment is taking place," he said. While India grew as India's economy grew at a fast pace between 8 and 9 per cent, the expansion of the private sector was "limitless". This was accompanied by an immediate slowdown in the as a result of which major segments of Indian economy got impacted -- steel, infrastructure which was due to poor management, power mainly because of corruption, he said.

First Published: Thu, October 12 2017. 11:48 IST