Osaka: Amid 10 state-run lenders suffering losses of over Rs 15,000 crore in the March quarter, Finance Minister Arun Jaitley has promised greater capital support to banks while warning that defaulters cannot be allowed to "sleep well", leaving all the worry to bankers.
He also rejected suggestions that huge losses being posted by public sector banks (PSBs) were like "skeletons tumbling out", saying NPAs were mostly due to business-related losses in certain sectors, rather than due to frauds, and one must "distinguish between chalk and cheese".
Jaitley, who was on a six-day visit to Japan to attract investments, said the losses were because of provisioning to cover for bad debt and most of the banks including State Bank of India and PNB had good profits at operational level.
"Look at the balance sheets of these banks. Punjab National Bank operationally had a good profit, SBI had a good profit. It is the provisioning which makes it look like a loss," the Finance Minister told PTI.
Stating that non-performing assets (NPAs) or bad loans have always been there, Jaitley said: "Whether you keep it below the carpet or you bring it into the balance sheet... I think a transparent balance sheet is the best way of doing business and that's what the banks are today doing."
"I am very clear, the government will fully strengthen the banks and fully support the banks where it is needed. I have declared a figure in the Budget, but I am willing to look at a higher figure if that is necessary," he added.
On measures being taken to empower the banks, he said bankruptcy law is one empowerment while the strategic debt restructuring (SDR) mechanism of RBI is also there.
"What we are doing to several other recovery laws the Securitisation, Debt Recovery Tribunal (DRT) itself is an empowerment. Therefore you cannot indefinitely have a situation where people who owe money sleep well and bankers have to worry. I think the people who owe these monies will also have to act," he said.
Asserting that all NPAs are not bank frauds, he said there may be some improper loans but there were a large volume of loans resulting from business losses or on account of sectoral losses.
"The loans were rightly given, sectors haven't done well. So to say that these are all skeletons stumbling out (is not correct). A business loss is not a skeleton. A skeleton is something which is done as a scam or a scandal and therefore we must be careful to distinguish between chalk and cheese as far as the banking NPAs are concerned," he said.
Additionally, the three critical areas of future will be to continue the spend on infrastructure, rural India and social security, the Finance Minister said.
Infrastructure spending would involve building modern railways and trains, better air services, more electricity than what is required, bigger highways, toilets and more ports, he added.
Stating that rural India has been neglected the most, he said maximum resources should flow there.
"I think this whole series of steps we have taken now have to become bigger leaps as far as social security is concerned. Any developed economy in the world cannot be without a social security bracket.
"So far people have not even spoken about it in India and I think this is the first government which is taking steps in that direction and that will have to consolidate over the next three years," Jaitley added.
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