Expressing concern over rising bad loans with public sector lenders, Finance Minister Pranab Mukherjee today asked them to devise strategies for containing and bringing down non-performing assets (NPAs).
"Of course, [it is] an area of concern as gross NPAs have increased from March 2010 to March 2011. Gross NPAs have increased from Rs 59,927 crore to 74,617 crore," Mukherjee said after meeting heads of public sector banks here.
"Growth of NPAs was one item on which detailed discussions have taken place and I have suggested to the public sector bank CMDs that you must not only apply your due diligence for the fresh sanction of the loans but also ensure the mechanism through which the NPA growth could be stemmed," he said.
He noted that state-owned banks have witnessed significant credit growth of 22.44% in the last financial year. However, there has been a moderation in the last quarter.
Considering that the investment needs of the infrastructure sector are increasing, he said, banks need to sustain and improve the flow of credit to the sector. Banks should gain more headroom for lending to infrastructure projects by availing 'Takeout Finance' from IIFC.
On the farm sector loan, Mukherjee said, against the target of flow of Rs 3,75,000 crore as agricultural credit in 2010-11, the achievement has been over Rs 4,46,000 crore.
It is imperative that this momentum be maintained. While the overall progress of agricultural credit was a matter of satisfaction, a few banks have failed to meet this obligation, he said.
He expected these banks to focus attention on this important aspect and show visible signs of improvement.
The Finance Minister said that the Task Force under the chairmanship of Nandan Nilekani in its interim report has recommended a general, unified, platform called Core Subsidy Management System for direct subsidy and entitlement transfer.
UIDAI has empaneled 64 banks for opening Aadhaar enabled bank accounts along with Aadhaar enrollment, which is in consonance with the Financial Inclusion agenda of the Ministry of Finance, he said.