Reforms restored PSBs’ health

13 of 19 government lenders back in black, GNPAs down 18%, says Sitharaman

December 28, 2019 09:34 pm | Updated 10:54 pm IST - NEW DELHI

Nirmala Sitharaman allayed fears of PSB chiefs over ‘undue harassment’ by enforcement agencies.

Nirmala Sitharaman allayed fears of PSB chiefs over ‘undue harassment’ by enforcement agencies.

Out of 19 public sector banks (PSBs) that had posted losses in 2018-19, 13 have returned to profitability in the first half of 2019-20, while gross non-performing assets (NPAs) had fallen 18% since last March.

After a meeting with PSB heads on Saturday, Finance Minister Nirmala Sitharaman said extensive government reforms had restored banks to health. Gross NPAs of PSBs had fallen from ₹8.96 lakh crore in March 2018 to ₹7.27 lakh crore in September 2019 with provision coverage ratio rising to more than 76%, the highest level in seven years, according to a Ministry statement.

Responding to concerns over “undue harassment” by enforcement agencies hampering banks from taking lending decisions, Ms. Sitharaman said the Central Bureau of Investigation (CBI) would not take suo motu action without referral from internal bank vigilance committees. “In the recent past, banks have gone through a slightly worrying period, wherein decision-making was getting stifled,” said Ms. Sitharaman, adding a sense of fear of “what the banks would say is undue harassment, uncalled-for harassment” by the three Cs — the CBI, CVC and CAG — was preventing genuine, bona fide decisions from being taken.

“Bankers were assured that prudent commercial decision-making would be protected,” said a Finance Ministry statement after the meeting, which was attended by the CBI Director also.

Meetings with ED, DRI

The Minister said similar meetings would be held with the Enforcement Directorate, Directorate of Revenue Intelligence and Customs Department to ensure that undue apprehensions did not hinder lending.

“No case, whatsoever, involving banks goes to the CBI without banks themselves deciding to send it. There is no suo motu case that the CBI takes against the bank,” said Ms. Sitharaman, explaining the process whereby the internal committees of banks would examine suspicions of fraudulent activities involving ₹3 crore or more before deciding to refer it to the CBI.

This mechanism needs to be made more robust, she said, calling for speedy action for disposal of vigilance cases against PSB officials that have been pending for years. This comes a day after an RBI report said frauds reported by banks — both private and public — during the first half of 2019-20 had touched an all-time high of ₹1.13 lakh crore, mostly due to delay in detection by the lenders. For cases referred to the CBI, other safeguards include document identification numbers for all notices to prevent harassment and a dedicated phone number for complaints. “While pursuing criminal action against those responsible, the agency shall be sensitive to the distinction between genuine commercial failures and culpability,” said the statement.

To aid debt recovery, the Ministry has launched e-Bkraya, a common e-auction platform to sell 1.73 lakh properties, worth ₹2.3 lakh crore, that have been attached by PSBs over the last three years. The platform is open for bidding by general customers across the country, with photographs, videos and documentation of all uploaded properties. So far, 35,000 properties have been uploaded.

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