P. Chidambaram in Mumbai on Saturday. (PTI)
Mumbai, Dec. 14: Finance minister P. Chidambaram today blamed “tardy” state-run banks for the high level of non-performing assets (NPAs) and said the banks’ boards and not the government should be held responsible.
“If the banks’ boards cannot perform their duty, blame should stop with the boards and not with the government,” Chidambaram said at the 20th anniversary of the the National Stock Exchange.
“NPAs are high because the recovery measures are soft. Bankers are being tardy and to some extent soft on recovery. We have failing companies and prosperous promoters,” he said.
Most NPAs are generated by the state-run banks. The United Bank of India has an NPA level of over 7 per cent, while the State Bank has over 5 per cent bad assets.
The minister said the RBI and the government had taken serious note of the issue and asked banks to expedite recoveries aggressively. The State Bank has set up a separate vertical to tackle NPAs, he noted.
On capital infusion in state-run banks, Chidambaram said the infusion would continue even as bad assets rose because of the rate at which the overall assets of the banks were growing.
The finance minister said the government might promulgate the ordinance to give greater powers to the Securities and Exchange Board of India (Sebi) for the third time if the standing committee scrutinising the bill to replace it did not submit the report in the current session of Parliament.
The committee was supposed to submit the report on the first day of the current session of Parliament. The winter session is scheduled to conclude on December 20.
If the report does not come by the last day of the session, the government will have to promulgate the ordinance for the third time. The ordinance has already been promulgated twice so that the powers given to Sebi remain in place for effective supervision of markets.