States will have to generate own resources for farm waivers

Finance Minister Arun Jaitley's statement today, came after a meeting with the heads of PSU banks that he was attending to discuss the problem of Non- Performing Assets (NPAs) crisis. "The ordinance passed by the Honorable President seeks to incorporate issuances of Government of India authorising the RBI to initiate the insolvency and bankruptcy proceedings in relation to any stressed assets", he said.

When asked if the government was considering further consolidation of public sector banks, Jaitley said efforts were on in that direction.

Jaitley had said the ordinance empowered the Reserve Bank to issue "directions to any banking company or banking companies to initiate insolvency resolution process in respect of a default under the provisions of the Insolvency and Bankruptcy Code (IBC), 2016". Total NPAs at the end of December 31, 2016, is estimated to have crossed Rs 7 lakh crore. The comment comes after the Maharashtra government announced that it would waive the entire loan burden on farmers across the state.

One of the crucial components of the ordinance was to enhance size and scope of an oversight committee so that decisions and actions can be taken up quickly.

"Right now, the RBI is discussing on it. Information has already been collected on such accounts from banks", Mundra said. "We will see the issue of resolution moving forward", the Finance Minister said.

Jaitley made the remarks regarding the loan wivers after a morning meeting with the chiefs of public sector banks.

Since the banking industry will also be liable to pay the Goods and Services Tax (GST), in the afternoon session the bankers will meet Revenue Secretary Hasmukh Adhia and other officials of certain departments of governments, Jaitley said.

In the detailed presentations made at the meeting, it emerged that in 2016-17, PSBs have made a stable operating profit of Rs 1.5 lakh crore.

He also acknowledged that there's challenge on credit growth as well as the need for a speedy resolution for all pending NPA cases.

  • Zachary Reyes