Finance Minister Arun Jaitley Tuesday asked public sector banks (PSBs) to take “effective action” in cases of fraud and wilful loan defaults, as he exuded confidence of achieving sustained economic growth rate of 8 per cent.
The growing economy will also help banks grow in strength, he said at the annual review meeting of PSBs here.
Conversely, as the lifeline of the economy, banks would need to build their strength to support the lending needs of a growing economy, he added, according to an official release.
“At the same time”, he exhorted the banks “to ensure all steps at their end to ensure clean lending and effective action in cases of fraud and wilful default, to justify the trust reposed in banks. Banks must strive to be seen always as institutions of clean and prudent lending”.
The meeting is taking place in the backdrop of the ‘Alternative Mechanism’ (AM) deciding to merge three public sector banks — Bank of Baroda, Vijaya Bank and Dena Bank — with a view to create a global-size lender which would be stronger and sustainable.
Banks have stepped up efforts as far as recovery of bad loans is concerned.
Lenders have made recovery of Rs 36,551 crore in the first quarter of the current fiscal. This is 49 per cent higher than the same quarter of the last fiscal. During 2017-18, banks recovered Rs 74,562 crore.
Jaitley said the formalisation of the economy through the Insolvency and Bankruptcy Code (IBC), GST, demonetisation and digital payments have enabled better assessment of financial capacity and risks, and coupled with inclusive growth through massive financial inclusion, has unlocked purchasing power which will drive India’s growth.
The finance minister said that “this should help India sustain a growth rate of around 8 per cent”.