State-run banks under watch after a spike in NPAs -Economic Times
NEW DELHI: The finance ministry has put the lending of state-run banks under close watch after a spike in non-performing assets (NPAs) that has forced many of them to slow down credit.
The ministry has set up a committee to look into the monitoring system of state-run banks for bigticket loans, but the lenders aren't enthused by the idea.
The ministry feels this will quickly bring companies not servicing loans in time onto the government's radar. They may even have to pay higher interest rates for fresh loans from other banks.
"Those companies which are perennially in the habit of late servicing of loan payments or are rigging the system through multiple banking should be paying more for credit," said a senior finance ministry official, adding that the government-appointed committee will look into these issues.
The committee, which will include Reserve Bank of India (RBI) representatives, will also take up cases of 'quick mortality' related to loan turning going bad within a matter of months.
"We will take RBI and other bankers on board. This should not be (regarded) as interference in the daily operations of banks," said another ministry official, adding that the initiative had been taken by the newly appointed financial services secretary GS Sandhu.
"Another working group has been set up to look at treasury practices in PSBs (public sector banks). It is largely an in-house exercise to improve the management system and take on b ..
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