Issuing a warning to big defaulters, Finance Minister P Chidambaram on Tuesday said that the Government is monitoring the top 30 non performing assets (NPA) accounts in each state-owned bank and asked the lenders to set up separate verticals to recover money from written-off accounts.
The minister, who reviewed the performance of public sector banks, expressed satisfaction over credit growth and assured the lenders the Government will finalise modalities for Rs 14,000 crore of capital infusion within a week.
He sought to dispel the impression of subdued economic activity, by claiming that the economic scenario was not as “gloomy” as was being painted.
“There are new proposals, they are being cleared...Things are moving. Thanks to the Cabinet Committee on Investment (CCI) and Prime Minister's Group (PMG) and thanks to investors themselves (that the scenario is improving), “ Chidambaram said while speaking to media persons after reviewing the banks' performance.
Clearance of projects by the CCI has spurred lending activity, he said, adding that even though there is a slowdown in the current fiscal year, the Government has got 173 new proposals each with over Rs 250 crore of investment, which are being processed.
The minister hoped that NPAs are a “function of economy” and would improve with the recovery in economic growth.
Chidambaram said housing loans recorded a healthy growth in the first and second quarters and rose by 42 per cent and 61 per cent, respectively.
Growth was also observed in education loans, he said, adding that banks have been asked to meet the lending target with regard to minorities. The minister said PSU banks will open 10,000 new branches and set up 34,668 on-site ATMs during the course of the current financial year.
Chidambaram however expressed satisfaction over credit growth by PSU banks in the first and second quarters of the current financial year and hoped that it will remain “satisfactory” in the remaining part of the fiscal.
Meanwhile he also informed that India has received over $ 9 billion through from two foreign schemes, which were announced in September to attract foreign funds and help the country to bridge the widening current account deficit (CAD).
“Banks have taken advantage of RBI's liberalisation of FCNRB and Tier I capital schemes. So far, under the two schemes put together, banks have brought in $9.6 billion,” Chidambaram said.
Soon after taking over as RBI Governor on September 4, Raghuram Rajan had announced opening of a swap window facility to encourage banks to lure NRI funds.
Under the facility, banks are permitted to swap fresh FCNR(B) dollar funds, mobilised for a minimum tenor of three years, at a fixed rate of 3.5 per cent per annum for the tenor of the deposit.
Also, he had relaxed norms for banks and allowed them to raise capital abroad to the tune of 100 per cent of their Tier I (equity) capital. The schemes will remain valid till November 30.
Referring to the ban on import of gold coins, the minister ruled out any possibility of lifting it and asked banks to strictly follow guidelines restricting inward shipments of the metal.
“Import of gold coins and gold medallions is prohibited. Nobody can import gold coins and medallions,” he said, referring to a suggestion that the Government should allow import of coins for 'shagun' (auspicious gift) purposes.
He said traders can buy gold from the domestic market and make coins, but the Government will not relax the curbs that were imposed to contain CAD.