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FM likely to announce steps in the Budget to deal with rising bad loan situation

New Delhi, 2 June-2014, PTI: The Finance Ministry is likely to announce steps to deal with rising bad loan situation in the budget to be presented some time early next month. “NPA is a matter of concern. We are discussing it. The government is likely to make announcements on NPA situation in the upcoming budget,” a senior Finance Ministry official said.

FM likely to announce steps in the Budget to deal with rising bad loan situation

FM likely to announce steps in the Budget to deal with rising bad loan situation

The final budget 2014-15 is likely to be tabled in the Lok Sabha in the first week of July and the Finance Ministry has already started the exercise to firm up the proposals for the fiscal.

There has been a sharp increase in non-performing assets (NPAs) in the recent years due to slow growth. The gross NPAs of public sector banks rose to Rs 2.03 lakh crore at the end of September, 2013 from Rs 1.55 lakh crore on 31 March, 2013.

According to the latest data, the total stressed assets in the banking system at December, 2013 was 10.13 per cent of the gross advances of the banks. The figures for NPA at the end of March 2014 are not available yet. Recently, Reserve Bank Deputy Governor R Gandhi had expressed concerns over rising bad loans and said banks should strengthen their internal credit appraisal systems to minimise the risk of default.

“This would mean getting the house in order and at least on this score, banks would be on stronger ground. Banks would still be vulnerable to other factors, such as economic slowdown or policy changes or willful defaults. But, one area of concern would be plugged,” he had said.

“We can see that among the proactive steps that a bank can take to stem the problem of increasing level of NPAs and stressed assets, use of credit ratings is an important one,” Gandhi had said.

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