Asserting that there should be efficiency in recovery procedures from loan defaulters, Finance Minister Arun Jaitley on Saturday said banks need to support the corporate sector to expand credit flows, as public investment is the key to counter the global slowdown.
"We need to have teeth to our functioning and hope recovery does take, place as public investment is the key to counter the global slowdown," Jaitley said at a seminar on debt recovery.
He emphasized that foreign capital and public investment in India are intact, but added domestic investment situations are still challenging.
"The Indian private sector needs to expand in a big way as it needs to invest. And to support that, they need banks to insure a flow of credit so it helps in disinvestment," he added.
" Foreign capital and public investment in India are intact, but in domestic investment situations are still challenging," he said.
"If bank money is locked with some defaulters, then it prevents it from being used by thousands of others who could put it to productive use," Jaitley said.
He said the role of banks, particularly in the private sector, is significant for credit and investment to pick up.
Jaitley acknowledged the proactive approach of the Reserve Bank of India(RBI) in providing flexibility to banks for restructuring management.
He hailed the government's effort in passing the insolvency bill and the amendment to the Sarfaesi Act.
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