You are here: Home » Finance » News » Banks
Business Standard

NPA resolution to spur credit expansion, growth: Arvind Panagariya

The 12 identified cases account for 25 per cent or about Rs 2 lakh crore of NPAs

Press Trust of India  |  New Delhi 

Arvind Panagariya, NITI Aayog Vice-Chairman, NITI Aayog
Arvind Panagariya

Resolution of bad loans in the banking system is on 'right track' and will 'open the door' to rapid credit expansion and growth, Niti Aayog Vice Chairman has said.

Terming the non-performing assets (NPAs) or bad loans problem as a 'legacy issue', he said that even after three years of the government taking charge, it has not gone away.

"Now we are on absolutely right track. Once we solve the NPAs issue, it will open up also the door to faster credit expansion. If this is done, this problem of twin balance sheet issue (over-leveraged companies and bad-loan-encumbered banks) will get addressed at the result of this.

"So will be better equipped to lend and on the sides of borrowers there will be greater appetite," Panagariya told PTI.

The banking sector is saddled with NPAs of over Rs 8 lakh crore, of which Rs 6 lakh crore is with public sector (PSBs).

As part of its strategy to rein in the unacceptable level of NPAs, Reserve recently identified 12 accounts for (IBC) proceedings with each of them having over Rs 5,000 crore of outstanding loans, accounting for 25 per cent of total NPAs of

The 12 identified cases account for 25 per cent or about Rs 2 lakh crore of NPAs.

When asked about his view on merger of a weak bank with a strong bank, the outgoing Vice Chairman of Niti Aayog said that consolidation of public sector (PSBs) is necessary, also because the pool of talented people who have the specialisation of running the banking business is limited one.

"So if you have 25 PSBs, then you spread it over too many and everybody who is an expert says, we do not have good management, and so consolidation will also bring good management to the

"Then need for number of competent people...Would be smaller if the number of is smaller," he noted.

The ministry has sought help of NITI Aayog and global consultancy firms to examine the possibility of next round of consolidation of PSU with an aim to create a few lenders of global size and scale.

NITI Aayog's report is expected to set the tone for consolidation roadmap.

Five associate and Bharatiya Mahila Bank (BMB) became part of SBI on April 1, 2017, catapulting the country's largest lender to among the top 50 in the world.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Sun, August 13 2017. 13:26 IST
RECOMMENDED FOR YOU