Arun Jaitley meets FinMin's consultative committee, discusses banks' bad loans

NEW DELHI: The government is taking sector-specific measures to deal with bad loans, especially the resolution of large debts, and may include setting up of more oversight committees, as initiated by the Reserve Bank of India, for faster settlement of such cases.

“RBI has made an oversight committee to look into process of cases referred to it by different banks. Seeing the response and its performance, the government is considering multiplication of such committees,” finance minister Arun Jaitley told the first meeting of his ministry’s consultative committee on Wednesday, which discussed non-performing assets.

According to a finance ministry noted statement, Jaitley said the core problem of non-performing assets was with very large companies – although few – mainly in steel, power, textile and core sectors.


“They had expanded capacity during the boom period (2003-08) but could not face the onslaught of the global financial crisis and consequent slowdown,” the minister noted, adding that the steel sector is recovering while many decisions have been taken to resolve problems in infrastructure, power and textile.

The growth of bad loans slowed in the last quarter of the current financial year, Jaitley said. He said options are being debated on setting up a bad bank to hold stressed and non-productive assets.

Some members of the consultative committee suggested that state governments should be allowed to take part in the auction of stressed assets. Some said the government must establish a Public Sector Asset Rehabilitation Agency and it should consider NPAs where sector-specific reforms do not work.

There was a suggestion to explore a long-term debt market for financing NPAs. It was also recommended that criminal action be taken against big, wilful defaulters.