Banks must ensure flow of credit to every sector of industry: Chidambaram

Last Updated: Thu, Aug 29, 2013 16:40 hrs

Union Finance Minister P. Chidambaram said here today that banks must ensure flow of credit to every sector of industry and that bankers have been told to be sympathetic and have a humane approach towards genuine defaulters.

The Finance Minister said that banks need capitalization to meet their enhanced lendings, which is increasing every year and disclosed that this year the Government has made provisions of Rs. 14,000 crore for bank recapitalization.

He added that normally banks make their own arrangements to meet their capital requirements both through their own resources such as their profit etc. and the market. The Finance Minister said that all our Public Sector Banks (PSBs) are following Basel III norms and, in fact, our capital and provisioning requirements are stricter than Basel III norms.

Additionally, Chidambaram said it is time for hand holding of borrowers who are facing difficulties, especially industry.

"Genuine defaulters and willful defaulters need to be dealt with separately. We have to be strict with willful defaulters," Chidambaram said.

The Finance Minister, who was speaking at the Parliamentary Consultative Committee Meeting of his Ministry here today, said that the subject matter for the discussion of the today's meeting was "NPAs in Public Sector Banks (PSBs) and measures taken to contain them."

The Finance Minister said that NPAs are critically dependent on the performance of the economy.

"If the economy is growing at 8 to 9 percent per annum, then the NPAs would be low. ...(Presently) NPAs is at 3.84 percent at the end of March, 2013 while it was 2.32 percent in March, 2011," Chidambaram said.

Chidambaram gave details of sectoral NPAs including agriculture sector at 5.46 percent, MSME sector at 5.82 percent, Corporate Sector at 3.44 percent, retail loans at 2.37 percent, and real estate at 1.92 percent among others. (ANI)

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