Bad loans, the biggest challenge for public sector banks: FM

To take up UBI issue with RBI Governor on Friday

Updated - May 19, 2016 06:29 am IST

Published - March 05, 2014 06:38 pm IST - New Delhi

Union Finance Minister P. Chidambaram flanked by Deputy Governor, RBI, K.C.Chakrabarty and Secretary- Financial Services, Rajiv Takru during a review meeting in New Delhi on Wednesday. Photo; Ramesh Sharma

Union Finance Minister P. Chidambaram flanked by Deputy Governor, RBI, K.C.Chakrabarty and Secretary- Financial Services, Rajiv Takru during a review meeting in New Delhi on Wednesday. Photo; Ramesh Sharma

Worried over a further rise in bad loans, especially among large companies, Finance Minister P. Chidambaram, on Wednesday, exhorted public sector banks to effectively deal with non-performing assets (NPAs), their biggest challenge.

Addressing a press conference here after reviewing the performance of public sector banks, the Minister said “The biggest challenge facing the public sector banks is NPAs and asset quality... NPAs are high in large corporate sector as well as in the SSI and MSE sector.”

Without providing NPA data of PSU banks for this financial year, Mr. Chidambaram said it was ‘likely to be a little higher’ over 2012-13, when NPAs stood at 3.84 per cent.

Stressing the importance of addressing NPAs, the Minister said, “We have told them (banks) to focus on recovery and banks are focusing on recovery.” He said the efforts had yielded some results as PSU banks recovered Rs.18,933 crore of bad loans during the nine months through December, 2013.

Bad loans Bad loans of PSU banks rose by 28.5 per cent to Rs.1.83 lakh crore in March, 2013, over the preceding September.

To a query on the bad loans of United Bank of India, he said the issue would be discussed separately with Reserve Bank of India Governor Raghuram Rajan on Friday.

Kolkata-based United Bank posted a net loss of Rs.1,238 crore in the three months ended December, 2013, during which its gross NPAs surged to Rs.8,546 crore from Rs.2,964 crore at the end of March last year.

Mr. Chidambaram said United Bank had managed to recover Rs.1,200 crore in January and February.

To a query on gold import curbs, the Finance Minister said the government would review the customs duty on the metal after the final current account deficit (CAD) numbers for this financial year were out.

“We will revisit the import duty on gold only after the CAD figures become clear for the end of the year. Let’s see what the CAD figures are,” he said.

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