Government is working with regulators, banks and other agencies to resolve the issue of missing foodgrain stocks in Punjab, Minister of State for Finance Jayant Sinha said today.
"We are working with the regulators as well as the banks and various other government agencies to ensure the matter with respect to the food stocks in Punjab is satisfactorily resolved," Sinha told reporters here.
"The issue raised by the Reserve Bank is correct from the standpoint of the regulator. Banks' explanation is also correct. We need to find a right solution for the issue," Sinha added.
He did not specify the underlying value of the missing foodgrain or if the problem exists in other states as well.
Sinha said the government will investigate the case and come out with the actual position in a few days.
According to reports, foodgrain procured by the Punjab government worth Rs 20,000 crore is missing from the state godowns.
However, the Punjab government denies the reports and has said all stocks procured over the years have been duly accounted for.
Some 30-odd banks, led by SBI, had extended loans of Rs 12,000 crore to the state for its foodgrain procurement programme.
The Reserve Bank has asked the lenders to set aside money as provisions for non-performing assets. Loans to state government are considered sovereign, and therefore banks say there is no need to set aside money.
Banks are already treading on thin ice with RBI Governor Raghuram Rajan ordering banks to clean their books by next March. This had led to banks making massive provisions in the December quarter, which is expected to continue in the fourth quarter of 2015-16 as well.
Reports said lenders have threatened to stop lending to Punjab, a primarily agrarian state, in the new season if the issue remains unresolved.
Out of the Rs 1 trillion worth food credit, around 40 per cent (Rs 40,000 crore) are lent to Punjab alone, which means that the state procures 40 per cent of the overall food procurement on behalf of the FCI/Centre.
Meanwhile, when asked about reports of L&T Finance
Holdings eyeing stake in state-run IDBI Bank, Sinha said, "Discussions with various investors are underway as far as IDBI Bank is concerned. So let us see how the process unfolds. That is all we can say right now."
At another function at the BSE, he told reporters that some investors have already undertaken due diligence on IDBI Bank.
"Now we have to see how best we can move this process forward. As the process moves forward we will see what indeed are the challenges and issues that would emerge from that," he said.
Speaking at a banking conclave organised by industry lobby IMC, Sinha said the government is working very closely with the RBI on banks' legacy issue of non-performing assets for the past one year.
"It has been a major area of focus for our government. We have been working with RBI and various financial institutions to prevent anything systemic, to be able to deal with the issues across varieties of front," he said.
He affirmed the government support to keep the state-run banks adequately capitalised so that the capital adequacy ratio is above the mandatory requirement.
Sinha said the government is working as a trustee with the banks and stressed on the importance of creating value.
"Value creation will come both by having differentiated winning strategies for our financial institutions so that all are not following the same strategies and the second is to ensure that our banks have sufficient scale to be globally competitive," he said.
He further said there is already a "policy with respect to NPA recognition and the banks have been going through and working with various accounts. How that has played out so far, we will come to know once the March quarter numbers are out," he said.
Touching on bank consolidation, Sinha said the process has been strengthened with the establishment of the Banks Board Bureau (BBB).
He said the government is trying to bridge various gaps which have been present in the banking system for long, and pointed out the decisions on allowing two new full-fledged banks and 21 payments and small finance banks as part of the process.
