The Minister also urged the bankers to take decisions in a time bound manner and ensure quick flow of funds.
“Bankers should refer stressed assets cases to the National Company Law Tribunal (NCLT) only if satisfactory resolution outside the Tribunal is not available”, said Minister of State for Finance Anurag Singh Thakur in his keynote address at the Indian Banks’ Association’s 72nd annual general meeting.
Throwing light on the transmission of policy rate cuts to borrowers, he said that despite a 110 basis points repo rate reduction by the Reserve Bank of India over the last few months, banks have not passed on the full benefit to the consumers.
"Only a fraction of the rate cuts benefits were passed-on by the banks to borrowers. I appeal to banks to further pass on the benefits of the rate cuts to companies which will lead to an increase in the consumption cycle, thereby, leading to a revival in their investments," Thakur said.
In the last five years, the government has recapitalised public sector banks (PSBs) by over Rs 2 trillion, and recently also announced an immediate capital infusion of Rs 70,000 crore in these lenders.
Thakur said the banks are being encouraged to lend more to NBFCs, which will improve the availability of credit in the market and reduce the liquidity crunch.
Thakur repeating the assurances provided by the Prime Minister Modi and Finance Minister Nirmala Sitharaman to bankers, that decisions taken by them in good faith, with a sound business rationale, in the normal course of business will not face any witch hunt. He also mentioned that the government is standing with the banking industry.
“And no decision taken in good faith will be treated adversely by any agency in the future. Feel free and take decisions in the interest of the banks and the country.”
As Bankers are concerned about the stressed assets cases being referred to NCLT are increasing in numbers due to the fear that their decisions on resolution via other routes, including one-time settlement, could be questioned later.
However, the downside of this tendency is that if an asset is not revived within the stipulated period under NCLT then it goes straight into liquidation.
The Minister also urged the bankers to take decisions in a time bound manner and ensure quick flow of funds. This can lead to an accelerated credit growth in the economy.
Referring to the government’s goal of making India a $5-trillion economy by 2024-25, Thakur emphasised that banks have the responsibility of being drivers of economic growth and they have an indispensable role to play.
“The track record of the banking industry inspires confidence that it will successfully deliver and contribute to our nation’s growth and well being.
“For any economy to grow and prosper, there should be easy availability of funds. Over the last five years, the government recapitalised the PSBs with over ₹2 lakh crore. This has helped them immensely,” said Thakur.