Stricter Rules Set To Deal With Non-Performing Assets: Finance Ministry


NEW DELHI: With Mr. Narendra Modi stepping up as the new Prime Minister for India, many sectors are likely to show some new changes. The same way the banking sector of finance ministry is ready with some stricter rules to deal with non-performing loans and some mergers of public sector banks to create stronger lenders.

"We will present all options which can be used to strengthen banks, including consolidation," said a finance ministry official, requesting anonymity. To explain all the achievements and future plans to Modi, the Cabinet secretary Ajit Seth had earlier asked all departments to prepare presentations. Apart from the past achievements and future plans the presentation will also include a blueprint on the proposed banking capitalization programme, measures to arrest bad loans and steps towards financial inclusion."Consolidation in PSBs can be looked at if there is a political will. We have to present all options," he added.

The finance ministry seems to have already taken the move for early release of 8,000 crore to introduce additional capital in the state owned banks. But the 26 state-run banks will together need about 4.15 lakh crore in capital infusion to be able to maintain lending growth under the Basel guidelines. The government is unable to meet this demand as it has just allocated 11,200 crore towards bank capitalization in the current fiscal year, which is comparatively lower than the amount infused in previous years.