Expedite on-boarding of stressed accounts by the National Asset Reconstruction Company (NARCL), enhance focus on prevention of bank frauds and wilful defaults, improve due diligence before loan disbursal, take proactive cybersecurity measures, and ensure security of customers’ private data–these were among the key directions and recommendations made by the Finance Ministry to public sector banks (PSBs) at a meeting to review the lenders’ performance.
The meeting, held Saturday, was chaired by Finance Minister Nirmala Sitharaman and attended by Minister of State for Finance Bhagwat Kishanrao Karad, Department of Financial Services (DFS) Secretary Vivek Joshi, heads of the PSBs, and senior DFS officials. This could be the last full review of the PSBs before the presentation of the Interim Budget for 2024-25 (FY25) and the Lok Sabha polls, which are likely in a few months. “The Finance Minister directed that the acquisition of stressed accounts by NARCL needs to improve further, and necessary efforts must be made in this direction. It was advised that NARCL and banks should hold regular meetings to expedite the on-boarding of stressed accounts,” the Finance Ministry said in the post-meeting release. It said that Sitharaman also emphasised the importance of mobilising deposits to the PSBs, urging them to innovate and offer attractive deposit schemes to enhance their deposit base, which will enable them to extend more credit.
A government-backed bad loan aggregator, the NARCL was incorporated in 2021 with PSBs holding a majority stake, while the balance is held by private sector lenders. It was set up with a strategic objective to clean up the legacy stressed assets with an exposure of Rs 500 crore and above in the Indian banking system. However, the NARCL’s progress has reportedly been slow due to a mix of factors that include structural issues as well as reluctance from lenders ..
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