Govt, RBI working to resolve banks' bad loan problem: Sinha

He said the problem will continue till March 2017

With banks saddled with staggering bad loans of Rs 8 lakh crore, Minister of State for Finance Jayant Sinha today said the government is working with RBI to resolve the problem, which is going to continue till March 2017.

"Obviously as far as stressed assets are concerned, it's continuous process, that's going to last till March 2017 of recognition, classification and other side of it is resolution", Sinha told reporters at the Second edition of Gyan Sangam, a meeting of heads of public sector financial institutions.

Scheduled commercial banks including public sector banks have stressed assets, a combination gross NPA and restructured loans of Rs 8 lakh crore. This is about 11 per cent of loan book size of Rs 69 lakh crore of entire system.
 

"So how do you classify, how do you provision for it, that's one side and the resolution is the other side. So we are working with Reserve Bank of India on the resolution side," he said.

"As far as resolution is concerned we have significantly strengthened the mechanism through which banks can do resolution on an interim basis event as Bankruptcy code is now in Parliament," he added.

Sinha expressed confidence that the banks would be able to deal with the problem of stressed assets given the enhanced NPA resolution measures announced by RBI and the government recently.

"As part of stress quality review the RBI has looked at stressed assets across both public sector, private sector banks. They have done it system wise. They have looked at NBFCs as well. So we do understand where the stressed assets are. We feel that all our banks in fairly comfortable position as far as capital is required," he said.

"As we go through the resolution process and strengthen the resolution capabilities for the banks and legally through bankruptcy code, we think that we will be able to deal with the situation of stressed assets, he added.