Govt guarantee over Rs 30K crore approved for bad bank-Sitharaman

Finance Minister Nirmala Sitharaman has said that the cabinet has approved a central government guarantee of up to Rs 30,600 crore for Security Receipts that will be issued by the NARCL to public sector banks with NPAs. Ms Sitharaman said on Thursday that an asset quality review of banks that were conducted in 2015 revealed a high incidence of Non-Performing Assets (NPAs). The government then came up with a ‘4R’ strategy of Recognition, Resolution, Recapitalisation and Reforms. “After recognition, quantification of NPAs started in a planned manner, recovery also started. In the last 6 financial years, the '4Rs' were executed meticulously, banks have recovered Rs. 5,01,479 crore,” the finance minister said. Out of Rs. 5,01,479 crore, over Rs 3 lakh crore was recovered starting March 2018. This indicates that public sector banks gradually started recovering roughly four years ago. She went on to say that only two of the 21 public sector banks were profitable in 2018 and in 2021 only two have reported losses for the full year. Along with the NARCL, the government will also set up an Indian Debt Resolution Company, said the finance minister. It may be noted that public sector banks will hold a 51 per cent stake in NARCL and a 49 per cent stake in Debt Management Company.

In another virtual address Ms Sitharaman on Thursday said that the government's Jan Dhan-Aadhaar-Mobile (JAM) trinity facilitated reaching out to all the citizens across the country during the Coronavirus pandemic. She further said that the Aadhaar linkage too helped in verifying accounts faster and the last of the trinity, that is mobile, also helped “where every information about the deposit, benefits of government schemes or the subsidies in the account, was sent, even in regional languages". Ms Sitharaman said that there are many parts of the country which need extra attention and push and hoped that institutions like Rashtriya Bank Parishad would help in expanding the financial inclusion process.