Chidambaram asks banks to go after 'big' loan defaulters

Finance Minister P. Chidambaram Tuesday asked public sector banks to closely monitor big borrowers with loan amounts of over Rs.1 crore, who also constitute the bulk of the non-performing assets (NPA) of the lenders.

Talking to reporters after meeting heads of the public sector banks here, Chidambaram said growing cases of defaults among big borrowers were a matter of concern.

"It is a matter of concern that it is the big borrowers who are defaulting," the finance minister said.

Chidambaram said he has asked lenders to closely monitor top 30 NPA accounts in each zone of all the public sector banks.

Deteriorating asset quality, or rising NPA, is a big concern among the Indian banking sector. Gross NPAs of Indian banks are expected to reach 4.4 percent in the current financial year as compared to 3.4 percent in the previous year.

The finance minister said NPAs were rising due to difficult economic situation and the situation would improve with the pick up in growth.

Chidambaram advised banks to set up separate verticals dedicated to recover the bad loans that have been written off.

"Banks have been advised to empower or set apart an officer of senior rank, at least of general manager rank, to look at recovery, especially recovery from written-off accounts," he said.

The country's largest lender State Bank of India (SBI) has already set up a separate vertical for recovery of bad loans. The finance minister asked other government-run lenders to set up the dedicated entity in line with SBI.