Steps are being taken to remove obstruction to stalled projects, says FM

In a stern warning to wilful defaulters, Finance Minister P. Chidambaram, on Monday, asked banks to take firm steps against affluent promoters to recover loans from sick companies owned by them.

“We cannot have an affluent promoter and a sick company. Promoters must bring in money ... We wish banks take firm steps to recover NPAs,” he told reporters after meeting the heads of PSU banks and financial institutions here.

The warning comes in the backdrop of several companies, including Vijay Mallya’s Kingfisher Airlines, being unable to repay bank loans.

Gross NPAs of PSU banks have risen from Rs.71,080 crore as on March, 2011, to Rs.1.55 lakh crore as on December, 2012, of which corporate accounts constitute 53.68 per cent.

Of this, about 172 corporate accounts are NPAs of more than Rs.100 crore at the end of December, 2012. The amount involved in such cases is to the tune of Rs.37,194 crore.

Asking banks to take more steps to deal with the rising NPAs without hurting industry, Mr. Chidambaram said “Promoters have to bring in additional money and companies have the duty to pay back loans.’’

Commenting on the same, Finance Services Secretary Rajiv Takru said: “We are trying and banks are also trying to make distinction between wilful defaulters and people who are genuinely stressed and who have genuine problems.’’

The Finance Minister further said recovery had improved in the past one or two months and banks would take more steps to deal with the rising NPAs.

Stalled projects

Terming stalled projects as worrying, Mr. Chidambaram said steps were being taken to ensure that impediments are removed and credit flow takes place.

As many as 215 projects with an investment of Rs.7 lakh crore were now stalled and banks had disbursed about Rs.54,000-crore in loans towards them, Mr. Chidambaram said.

He further said the government had identified the main reasons for the delay in commencement of new projects in key infrastructure sectors, especially in road and power sectors.

There were 126 new projects for which the outlay was Rs.3.55 lakh crore and the amount sanctioned by banks against these was Rs.43,000 crore.

“The main reasons (for delays) are coal linkage, environment clearances and land acquisition,” he said, adding that there was now a greater degree of confidence than what was there six months ago.

On charges of money laundering by certain employees of three private sector banks, Mr. Chidambaram said the RBI and the Finance Ministry were looking into the issue.

“Secretary, Department of Financial Services, is looking at it closely. The RBI is looking at it closely. They (banks) themselves have instituted enquiries. Let’s give them a little time to come up with the report of the enquiry,” he added.

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