"The government certainly stands one with the banking system. Whatever steps that are required to be taken to find a resolution to this problem (of stressed assets), we will expeditiously work with India's banking system in order to strengthen it," he said.
The Centre is working towards strengthening its ability to support the banks through greater resource mobilisation, Jaitley said.
His comments at Indian Banks Association's annual general meeting (AGM) here came amidst increased speculation that the government is mulling increasing capital infusion in the 21 public sector banks (PSBs) which control over 70 per cent of the system.
According to various analysts, the Rs 10,000 crore recapitalisation provision in the budget may not be sufficient for the banks, given multiple pressures on the buffers.
Also Read
These emanate from the NPA resolution, where it has to set aside higher amounts as a growing number of chunky assets get resolved under the provisions of the newly-passed Insolvency and Bankruptcy Code (IBC).
With share prices of the banks being depressed due to high percentage of dud loans, there is a higher likelihood of the government investing itself in the PSU lenders.
"It has been a major challenge with regard to the increasing number of stressed assets. I think it is this which is really the core area of concern today," Jaitley said.
On the IBC, where RBI has mandated banks to resolve 12 large accounts representing over a fifth of the total stock of NPAs, Jaitley said he expects some "early harvests" soon because of the institutional mechanisms being created.
He asked stakeholders to repose trust in the institutions being created, adding that speed is of essence while dealing with the stressed asset problem.
"Certain amount of trust in the decision-making institutions is essential."
Disclaimer: No Business Standard Journalist was involved in creation of this content