Take joint action against wilful defaulters: Chidambaram to banks

New Delhi : Finance Minister P Chidambaram Tuesday advised public sector banks to form a consortium and take joint action against wilful defaulters, especially in the cases where the “promoter is prosperous but the company is sick.”

After reviewing annual performance of public sector banks and financial institutions for fiscal 2013-14, Chidambaram said tough measures need to be taken against wilful defaulters.

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The position that “promoter is prosperous but company is sick” is not acceptable, the finance minister said advising the banks to form a consortium and take joint action against such defaulters.

Sluggish economic growth has impacted banks performance in the financial year ended March 31, 2014. Gross non-performing assets (NPAs) have increased and net profit declined in 2013-14 year-on-year.

“The sluggishness in the domestic growth during the recent past and the tepid recovery in the global economy have impacted the NPAs,” the finance ministry said in a statement.

Gross NPAs of public sector banks rose from 3.84 percent as on March 2013 to 4.44 percent as at the end of March 2014.

However, from a peak of 5.07 percent, gross NPAs in the third quarter ending December, 2013, these have come down to 4.44 percent (provisional) in the last quarter of the year ending March, 2014.

The top 30 NPAs of public sector banks account for 40.2 percent of their gross NPAs.

“The CEOs of PSBs reported the measures being taken to bring down the NPAs. The Finance Minister asked them to redouble their efforts on recovery and take tough measures against wilful defaulters,” the statement said.