Concerned over the mounting level of bad loans, Finance Minister P Chidambaram today asked banks to take stern steps to recover advances from wilful defaulters.
"So banks must pay attention to the portfolio of non-performing assets, identify the wilful defaulters, take stern steps to recover loans from wilful defaulters even while helping others who are genuinely caught in business downturn to recover so that they can pay the loans in course of time. One must be sympathetic, one must be stern," he said at the 78th foundation day of Indian Overseas Bank here.
"We cannot show laxity to wilful defaulters. It cannot be where loans will become non-performing, where borrowers prosper and lenders suffer," he said.
NPAs, or bad loans, of public sector banks rose 28.5 per cent to Rs 2.36 lakh crore in September last year from Rs 1.83 lakh crore in March 2013.
Total NPAs had gone up to Rs 1.37 lakh crore in March 2012 from Rs 94,121 crore in March 2011. The amount of NPAs in September 2013 has more than doubled since March 2011.
"I can understand the reasons for rise in NPAs. Every effort must be made to identify those who are wilful defaulters and those who are caught in the business cycle," Chidambaram said.
The Finance Minister said "humongous" capital is required in the future and the government is doing its part...Banks have to find their own capital by retaining their profits for capital infusion.
He said banks infused about Rs 35,000 crore from their retained earnings in 2011-12 and Rs 37,936 crore in 2012-13.
