Having recognized the huge pile of NPAs hidden on bank books by ‘biting the bullet’, Interim finance minister Piyush Goyal has said that the banking system is now poised for a better future and support the credit needs of the economy. He also highlighted that the banking system is now strengthened to once again start becoming a powerful engine of growth, financing the infrastructure and other credit needs of the economy.
Goyal further said that there is a lot of enthusiasm among bankers to lend to particularly Micro Small and Medium Enterprises (MSMEs) and other small businesses. They are very keen to participate in the growing infrastructure story in the country.
Besides, the Minister underlined the Reserve Bank of India’s (RBI) asset quality review has led to the recognition of a huge pile of Non-Performing Assets (NPAs) hidden on bank books which is worth over 40% of the system-wide bad loans. This was followed by steps on resolution of stressed assets, including the passage of the Insolvency and Bankruptcy Code. In recent times, concerns have been raised over the ability of the banking system, 70% of which is dominated by state-run lenders, to support the credit needs of the economy as provisions for the bad assets drain capital buffers, leaving little for lending.