In order to deal with the problem of rising Non-Performing Assets (NPAs), the finance Minister Arun Jaitley has said that government is taking various sectoral specific measures for the resolution of large debts and would consider setting up multiple oversight committees under the Reserve Bank of India (RBI) to examine the cases of NPAs referred by banks. The ministry though added that the resolution of banks’ NPAs remained a challenge even though the rate of increase of such bad loans had witnessed slowdown in the last quarter of the current financial year.
Jaitley said the RBI has already set up an Oversight Committee to look into process of the cases referred to it by the different banks and pointed out that the core problem of NPAs is with very large corporates, predominantly in the steel, power, infrastructure and textile sectors and noted that the Steel Sector is on its path of recovery, while many decisions have been taken in the Infrastructure, power and textile Sectors to resolve their problems. Besides, he said that the NPAs surged during the boom period of 2003-2008 but could not face the onslaught of global financial crisis and consequent slow down thereafter.
The gross NPAs of public sector banks have risen from Rs 5.02 lakh crore at the end of March 2016 to Rs 6.06 lakh crore in December 2016. The members of Consultative Committee gave various suggestions in order to deal with the NPAs of PSBs. The RBI too has taken measures such as formation of Joint Lenders’ Forum (JLF) mandatory when aggregate exposure is more than Rs 100 crore, Flexible Structuring (5/25) Scheme for infrastructure.