Nirmala Sitharaman tells banks not to worry 3Cs; NCLT helps PSU banks recover this much amount

The Finance Minister along with the head of the banks held discussion with CBI director.

Finance Minister Nirmala Sitharaman once again on Saturday said the bank officials that they need not worry against any ”undue harassment” from agencies. The Finance Minister along with the head of the banks held discussion with CBI director. CBI has said that they will organise several discussions and seminar with bank employees to ward off their doubts about its approach against the banks. It comes days after Prime Minister Narendra Modi, as well as Finance Minister Nirmala Sitharaman, had assured bank officials of their support if the correct procedures were followed. Finance minister also spoke about the “fear of three Cs: Central Bureau of Investigation, Central Vigilance Commission, and Comptroller and Auditor General.”

Finance Secretary Rajiv Kumar in his briefing to media, just before the Finance Minister’s address listed out the conclusions of the meeting. He declared that banks, including the private sector banks, have recovered Rs 2.08 lakh crore under NCLT’s provisions out of which Rs 38,000 crore were of the public sector banks. 13 public sector banks ran a profitable business in 2019 which is a decline from numbers in 2018 when 19 PSBs were profitable. There was another announcement on Provision Coverage Ratio which stands at an all-time high of 76.7%. The Finance Minister also announced that Merchant Discount Rate (MDR) charges will be exempted on the transactions done through UPI AND RuPay mode of payments from January 1.

 The meeting also saw a discussion on non-performing asset recovery through both NCLT and non-NCLT means, the sources said. Banks have recovered Rs 4,01,393 crore over the previous four financial years, including record recovery of Rs 1,56,702 crore during 2018-19. The banks were also nudged to pass on more benefits of rate cuts to the customers. Despite the Reserve Bank of India (RBI) making credit cheaper, lending rates are rising for borrowers after accounting for inflation and falling economic growth.

The economy has slowed in the past few months, with the Q2FY20 GDP growth falling to 4.5 per cent and the weakness is expected to continue further. The RBI has responded by cutting rates by 110 basis points to a nine-year low of 5.40 per cent.

As bad loan recognition process nears completion, gross non-performing loans of banks improved to 9.1 per cent as of end-September 2019, compared to 11.2 per cent in 2017-18, says an RBI report. However, the numbers indicate major improvement on a full-year basis, as in 2017-18, the ratio stood at a high of 11.2 per cent and slipped to 9.1 per cent in 2018-19, the RBI said in its annual report on trends and progress of banking in 2018-19.