Blaming “tardy” state-run banks for high level of non-performing assets, Finance Minister P Chidambaram on Saturday said banks' boards and not the Government should be held responsible for the situation.
“If the bank boards cannot perform their duty, blame should stop with the bank boards and not with the government,” he said at a panel discussion at an event to commemorate NSE's 20th anniversary . He acknowledged that the Government has a nominee director in every public sector bank, but pointed out the roles of the independent directors, full-time directors, chairmen and managing directors and senior bank management.
During his three stints in the finance ministry, running into eight years, he has never interfered with the working of a bank, Chidambaram said. “NPAs are high because the recovery measures are soft. Bankers are being tardy and to some extent soft on recovery. We have failing companies and prosperous promoters,” he said.
Gross NPAs of banks crossed 4 per cent as of the September quarter at Rs 2.37 trillion and are projected to cross 4.4 per cent or Rs 2.9 trillion by the end of the fiscal, according to a report by rating agency Icra. Most NPAs are being generated by the state-run banks. United Bank of India has an NPA level of over 7 per cent, while SBI has over 5 per cent NPAs.The minister also said that the RBI and the Government have taken serious note of the issue and asked banks to expedite recoveries aggressively.