Government Implementing Holistic Strategies To Tackle Stressed Assets: Jayant Sinha

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While there is an issue of stressed assets in the country, it is important that we address the root cause of the problem. This was stated by Mr. Jayant Sinha, Minister of State for Finance.

Mr. Sinha stated that the government had taken three different kinds of measures to tackle the NPA issue: one, it was encouraging funds to take over stressed assets; two, it was enhancing creditor rights; and three, it was addressing sectoral issues. In the infrastructure sector, the government is focused on reviving stalled projects. A single asset reconstruction company would not be sufficient to revive the investment cycle by itself, he felt.

The focus of the Government is on making sure that projects are implemented on the ground. Mr Sinha stated that some of the measures being taken by the government include bringing down the inflation rate, compressing the black economy, and ensuring that savings move from physical assets to financial ones, thereby ensuring that there is more capital available in the economy for investment. The tax architecture was being completely overhauled and many more sectors had been opened up to FDI. These measures were helping to ensure that capital is not misallocated and is made available to finance growth in the country.

Mr. Janmejaya Sinha, Chairman, CII National Committee on Financial Inclusion and Chairman, Asia-Pacific, The Boston Consulting Group stated that in the past, India had been able to tackle the NPA issue successfully. However, with the focus shifting to infrastructure development, the loan portfolios of banks have gone awry.

Mr. Nimesh Kampani, Chairman, CII National Committee on Financial Markets and Chairman, JM Financial Group, suggested that a new bank should be created which would take on the stressed assets of the banks. He was of the view that this would help existing banks to focus on credit growth.

According to Mr. Leo Puri, Managing Director, UTI Asset Management Company Ltd., banking sector reforms needed to be properly sequenced and stepped up so as to propel growth.

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