FM to meet chief of PSU banks tomorrow

It comes at the backdrop of ongoing enquiry in United Bank of India for under-reporting of non-performing assets

Amids rising bad loans, Finance Minister P Chidambaram will meet chief executive officers (CEOs) of public sector banks and financial institutions tomorrow to take stock of their financial performance.

The meeting comes at the backdrop of ongoing enquiry in United Bank of India for under-reporting of non-performing assets and quiting of bank's Chairperson. The Gross NPA of the bank stood at 10.82% at the end of December 2013.

This would be the last meeting with bank heads under the present government.

The broad agenda of the meeting includes ways to cut deteriorating asset quality. Credit growth in targeted sectors is also part of the agenda, a senior official in the Finance Ministry said.

The gross non-performing assets (NPA), or bad loans, of public sector banks rose to Rs 2.03 lakh crore at the end of September from Rs 1.55 lakh crore on March 31, 2013.

The gross NPA of banks, including those in the private sector, rose by 28.5% from Rs 1.83 lakh crore in March 2013 to Rs 2.36 lakh crore in September last year.

The financial performance of public sector banks would also be reviewed as all of them have declared their third quarter results, the official said.

The meeting is being held at a time when talks between bank management and employees unions are taking place for wage revision.

Employees Unions are hoping that Finance Minister would take sympathetic view about the wage revision.

Among other issues, the interest subsidy scheme on education loans announced in the Interim Budget will be discussed.

Providing relief to 9 lakh families ahead of the Lok Sabha elections, the government announced it will waive the interest component of education loans taken before March 2009, a decision that will cost the exchequer Rs 2,600 crore.

At the end of December 2013, public sector banks had 25,70,254 student loan accounts. The amount outstanding was Rs 57,700 crore.

The Budget provision setting an agriculture credit target of Rs 8 lakh crore for the next financial year would also be taken up.

"This year, banks will exceed the target of Rs 7 lakh crore of agricultural credit. I am therefore encouraged to set a target of Rs 8 lakh crore for 2014-15," Chidambaram had said in the Budget speech on January 17.