State-owned banks have been asked to take fresh steps to speed up recovery of non-performing assets (NPAs), Finance Minister P Chidambaram said in the Rajya Sabha on Thursday.
“Government has advised public sector banks to take a number of new initiatives to increase the pace of recovery and manage the NPAs, which include appointment of nodal officers for recovery, to conduct special drives for recovery of loss asset,” he said during Question Hour.
He said the “stress” in the economy was reflected in the increasing NPAs and these would come down once the economic situation improved. He also said a bit of handholding was required for the stressed sectors. The minister said banks were obliged to follow the Reserve Bank of India (RBI) guidelines regarding recovery of loans.
“No special favour” will be shown to large borrowers by banks in recovery of loans, he said. “I will not allow banks to give special favours to large borrowers,” he added. Banks are required to monitor their NPAs and take steps to bring these down through upgradation and recovery among others. RBI also monitors the NPA levels in banks.
Agents’ commission
The government has decided to reduce agents’ commission under various small savings schemes and the Public Provident Fund to make these investor-centric, the FM said.
“The government, after consulting all stakeholders and representations received, has decided to reduce the commission under PPF and SCSS (Senior Citizens Saving Scheme) to zero and under SAS (Standardised Agency System ) to 0.5 per cent,” he said in the Rajya Sabha during Question Hour.
The government's move followed recommendations of the Shyamala Gopinath committee to reduce the commission of 0.5 per cent on SCSS and one per cent on PPF to zero. It had also recommended reduction in the commission under the Mahila Pradhan Kshetriya Bachat Yojana (MPKBY) to one per cent in a phased manner from the present four per cent and halve the commission for all other schemes under SAS to 0.5 per cent.
Chidambaram, however, said the commission under the MPKBY continued to be four per cent for the time being and the matter would be reviewed in “due course”.
“The main intention of these recommendations is to make these schemes more investor-centric than agent-centric,” he said.
The committee observed that it is advisable to pass on the benefit of market alignment of rates to investors rather than burdening the structure with higher administrative costs, he said. “To this effect, the decision is pro-investor and also keeps in mind the interest of agents where required,” he added.
