The statement by Finance Minister Arun Jaitley (“NPAs with PSU banks declining: Jaitley”, September 26) that banks are expected to recover ₹1.8 lakh crore this year may enthuse markets. But it would be interesting to know if he reveals the amount of “haircuts” banks will have to take to realise such a huge amount of NPAs, which is almost 20% of the gross NPA of nationalised banks. Data by the Bank Employees Federation of India show that during the four-year period, 2014-18, public banks realised a gross profit of ₹5,89,359 crore, but ended with a net loss of ₹77,642 crore due to high provisioning of ₹6,67,001 crore on NPAs.
This being so, the Insolvency and Bankruptcy Code along with National Company Law Tribunal proceedings appear to be in favour of corporate wilful defaulters. And banks are advised to forego a considerable amount in order to reduce NPAs. Therefore, one feels that the statement of the Finance Minister has to be viewed in this perspective.
G.B. Sivanandam,
Coimbatore
