Allaying apprehension of bad loans in public sector banks, Finance Minister Jaitley today said NPA situation is under control as economic conditions are showing signs of improvement.
"The situation is well under control. If you closely read the Financial Stability Report some important factors come out of the FSR. The first is that the number of weak companies are declining, the second is the number of stressed companies are deleveraging quite fast," Finance Minister Arun Jaitley told a press conference.
"There are also some positive indications about their ability to pay back to the banks itself. The stability report also feels that after the Asset Quality Review excercise, the valuation of banks' share will itself increase and therefore in future it will help in capitalisation," he said.
Gross NPAs of public sector banks (PSBs) went up to 7.30 per cent as of December 2015, from 5.43 per cent as of March 2015. In absolute terms, the reading increased to Rs 3,61,731 lakh crore in December, from Rs 2,67,065 lakh crore in March.
On the financial performance of banks, Jaitley said, public sector banks have actually even in the midst of challenges have collectively have made an operational profit of Rs 1.40 lakh crore.
"It is the provisioning which lead to a negative figure and once those sectors are addressed and some of those sectors are already showing a positive indication and obviously provisioning can itself be reversed in some of the cases," he said.
