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Act professionally, without fear or favour: Jaitley

Act professionally without fear or favour Jaitley Concerned over rising bad loans, Finance Minister Arun Jaitley on Thursday asked the chiefs of PSU banks to deal sternly with the issue of rising non-performing assets without any fear or favour.

He also said the government has already taken various steps to streamline the appointment of PSU bank chiefs, which will help in making PSBs professional organisations.

The minister was addressing the heads of Public sector Banks (PSBs) and financial institutions here.
Bankers should “work in a professional manner without any fear or favour”, Jaitley said, adding that the government has taken steps to streamline the process of appointment of Chief Executive Officers and Executive Directors of the PSBs to introduce objectivity in the process.

The decision making process must be influenced by professional reasons and not collateral ones, he said, adding that any external influence would be considered as a disqualification.

He further asked the bankers to take necessary corrective measures in order to bring down their Non-Performing Assets.

Later, talking to reporters, Jaitley said: “Over the last 2-3 years, on account of slowdown, one area of concern is that the NPA has risen. Therefore, the proactive steps to be taken to ensure that NPAs come down have been discussed.”
He also asked the bankers to take steps to increase the credit flow to various sectors of the economy and exuded optimism that credit growth would pick up in the second quarter as large number of projects are queuing up for credit.

On the condition of the economy, Jaitley said that global growth is quite patchy.

“There is great opportunity for India to attract foreign investment and large numbers of international entrepreneurs are showing their keen interest in India,” he said.

It was conveyed to the bankers that they should carry out lending on the basis of “objective due diligence without being unduly conservative, in a completely transparent manner, without fear or favour. This would boost the economy and enable an asset book of high quality”, according to an official statement after the meeting.

It said the meeting noted that gross NPAs have risen marginally in respect of PSBs due to sluggishness in domestic growth during the recent past, slowdown in recovery in the global economy and continuing uncertainty in global markets.

As per RBI data the five sub-sectors — infrastructure, iron and steel, textiles, mining and aviation services contribute significantly to the level of stressed loans.

The banks were directed to ensure more focused monitoring of their performance and also defending their interest at the Debt Recovery Tribunals (DRTs) and High Courts.

The meeting noted that new DRTs would be set up at six locations, including Chandigarh, Bangalore and Hyderabad, in the next financial year 2015-16, the statement said.

Financial Services Secretary Hasmukh Adhia assured the bankers that there will be no interference in the day-to-day internal functioning of the banks.

He asked the bankers to adopt objective mechanism and evolve a rational transfer and posting policy so that there is no grouse among the officers and staff in this regard.

The minister also reviewed the Pradhan Mantri Jan-Dhan Yoajana and asked banks to create awareness amongst all staff members of the bank and account holders for smooth implementation of the scheme.

Meanwhile, Jaitley also asked banks to take steps to ensure smooth credit flow to projects.

“One of the other areas of concern…We have suggested to the banks that proactive steps (be taken) in supporting various projects so that credit offtake in these projects takes up in a big way,” he said.

According to a report by research firm ICRA, PSU banks’ gross NPAs are estimated to be 4.4-4.7 percent as on March 31, 2015, as against 4.4 percent as on March 31, 2014 and 4.6 percent at the end of June, 2014.