Thursday, July 2, 2015

Stressed public sector banks to get government package soon

THE stressed public sector banks will soon get a comprehensive package from the government that is working on it. This was stated by minister of state (MoS) for finance Jayant Sinha on July 1.
The move aims at helping those PSBs reeling under bad loans (NPAs) and improve the flow of credit for industry,
"NPAs (non performing assets, or distressed loans) are simply a symptom of the underlying...
issues that need to be resolved," Sinha said at an event in New Delhi organised by the Indian Private Equity and Venture Capital Association.
"We are preparing a comprehensive package which we will bring out shortly," he said.
Snha said the government was trying to improve corporate governance and strengthen management at state-run banks, while also overhauling annual targets for public sector lenders to increase the focus on efficiency.
The minister said he would meet banks over the next two days in Bangalore to fine-tune their capital-raising plans.
"We are trying to understand exactly what is their capital requirement going to be in the next one to three years. We are there to support and provide them the capital," he said.
According to the Reserve Bank of India, gross NPAs as a ratio of total loans could rise to 4.8 percent by September from 4.6 percent in March.
The government has agreed to pump in about $3 billion into the banks during the current fiscal towards their capitalisation.
Earlier, finance minister Arun Jaitley had said his ministry was preparing a list of projects stalled due to lack of finance to set in motion the process of their revival and thus bring down the NPAs of banks.
"Many stalled projects have started. The secretary, department of financial services, in consultation with others, will prepare a list of projects stalled because of finance," Jaitley had told reporters here after meeting with the heads of public and private sector banks.
"We will deal with these stalled projects directly. We will call representatives of state governments, of the projects and the departments concerned over the next few weeks," he said.
Gross non-performing assets, or distressed loans, of state-run banks have gone up to Rs.260,531 crore as in December 2014. In the fourth quarter of January to March 2015, NPAs had come down from 5.64 to 5.2 percent.
According to the last Economic Survey, the stalled projects till December-end 2013 amounted to Rs.880,000 crore.
United Bank of India has the rare distinction as the public sector lender with maximum bad loans including restructured assets as a percentage of total advances, according to Reserve Bank of India (RBI) data. United Bank of India's 21.5 percent assets are either bad or have been restructured to save them from turning non-performing assets (NPAs).
Central Bank of India (21.30 per cent), Indian Overseas Bank (19.40 per cent), Punjab & Sind Bank (18.74 per cent) and Punjab National Bank (17.94 per cent) are other PSU banks with bad loans as of March 2015.

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