Rising NPAs: FM wants stern action

Rising bad loans of banks prompted Finance Minister P Chidambaram to once again ask lenders to come down heavily on wilful defaulters.

“Banks must pay attention to the portfolio of non-performing assets, identify 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 in New Delhi.

“We cannot show laxity to wilful defaulters. It cannot be where loans will become non-performing, where borrowers prosper and lenders suffer,” the finance minister said.

NPAs 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 increased to Rs 1.37 lakh crore in March 2012 from Rs 94,121 crore in March 2011.

Chidambaram asked banks to channelise a significant portion of their earnings for future capital requirements, rather than utilise them for higher wages to staff and dividends.