FM asks PSBs to clean up balance sheets

Finance Minister Arun Jaitley on Monday asked state-owned banks to clean up their balance sheets at the earliest, stressing they had all the powers to deal with wilful defaulters.

After reviewing the performance of public sector banks (PSBs) for the second quarter, Jaitley told a press conference the finance ministry would suggest more ways to improve the health of the PSBs grappling with "unacceptable" levels of non-performing assets (NPA).

The FM also reviewed interest rate in the light of key policy rate reductions by RBI in September. "When we took assessment of certain sectors which had a higher level of NPAs, some particular defaulters which are the common thread running across several banks did crop up for discussion," he said. The PSBs, he said, "have all the powers... Banks today have full authority and autonomy to take action against them (defaulters)".

He asked the bankers to get rid of their past scars of NPA and clean-up their balance sheet at the earliest.

He said the department of financial services, department of revenue and PSBs would suggest further measures to improve health of the PSBs.

Gross NPAs of PSBs rose to 6.03 per cent at the end of June, against 5.20 per cent in March.

Gross NPA of public sector banks rose to 6.03 per cent at the end of June, against 5.20 per cent in March. The government has assured of full support in terms of policy measures, the ministry said in a statement.