Arun Jaitley to meet PSBs and financial institutions over rising NPA menace

Arun Jaitley

Arun JaitleyUnion Finance Minister Arun Jaitley is expected to meet heads of Public Sector Banks (PSBs) and financial institution to discuss the matters pertaining to Non-Performing Assets (NPAs) and status of credit to micro and small enterprises.

The first such performance review meeting in this fiscal year will also be addressing execution of government initiatives such as Stand-Up India and Mudra Yojana, said a finance ministry official.

 “We will also focus on the performance of banks under prompt corrective action (PCA) and the steps they have taken to address the issues,” added the official.

The Reserve Bank of India (RBI) currently has 11 PSBs under the PCA framework.  In May, the regulator imposed PCA restrictions on public lender Allahabad Bank, including a direction to a directive to cut exposure to unrated and high-risk advances. It also asked Dena Bank to avoid taking fresh exposures. The centre is in a view that the Bankruptcy would the banks in recovering the sizeable part of their exposure.

“We don’t expect other banks to slip into PCA. In fact, at least two banks should be able to improve their performance and maybe stage a comeback by the end of this financial year,” said another government official.

The meeting would also address the merger of PSBs. Recently; the government had proposed the merger of Vijaya Bank and Dena Bank with Bank of Baroda. Reports also suggest that it may soon take up the merger of Punjab National Bank, Oriental Bank of Commerce and Andhra Bank.

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