Facing mammoth NPAs, PSU banks today said the problem of poor asset quality "may continue" for another 2-3 quarters as the Finance Ministry took stock of issues, including the alleged Rs 6,100-crore black money remittance case involving Bank of Baroda, facing them.
"The issue of poor asset quality was discussed. The banks clarified that the problem may continue for two to three quarters before their situation improves. Banks were advised to make judicious use of their capital," a Ministry statement said.
Briefing reporters after the meeting heads of all public sector banks along with top ministry officials, Minister of State for Finance Jayant Sinha told reporters that government has "taken various steps to bring down" non-performing assets (NPAs) and those measures too were discussed.
Gross NPAs of state-run banks at the end of March quarter stood at 5.2 per cent of total advances compared with 5.63 per cent in December.
Sinha said the recent developments relating to Bank of Baroda were also discussed and "banks were exhorted to have system in place to prevent such incidents".
Besides CBI and ED, SFIO is also probing into the alleged Rs 6,100-crore black money transaction case involving a Delhi branch of Bank of Baroda.
The meeting also deliberated on the issue of having robust compliance policies and the need to have requisite checks in place to detect any violation, along with strong alarm and signalling systems.
"The issue of human intervention in compliance related issues was also discussed and it was deliberated as to how to make it completely system driven," the statement added.
It further said banks were asked to give the progress on different subjects post Indradhanush framework.
In August, the government had announced 'Indradhanush' package for transforming PSBs through a bottoms-up approach. It represents the most comprehensive reform effort undertaken since banking nationalisation in 1970.
