Hyderabad/Mumbai, May 31 (IANS) Terming the banks non-performing assets (NPAs), or bad loans, issue a serious concern to the economy, Union Minister of State for Finance Jayant Sinha has said the government was working to sort it out and reduce NPAs.
"For this, the government has brought the Bankruptcy Bill and given more freedom and transparency to the banking sector," the minister told ETV News Network.
"Most of the banks incurred heavy NPAs between 2008 and 2012, during the UPA government. The present government decided to make it public, so that people should know what is the present situation," he said.
Sinha said his government is serious about taking action against wilful defaulters.
"With the new Bankruptcy Law, the defaulters cannot escape. With this the recovery from defaulters can be made easily and crony capitalism can be controlled," he said.
In this regard, Sinha said India is looking to start a fund that will invest in distressed loans held by lenders as they strive to clean-up their balance sheets in line with the Reserve Bank of India directive in the matter.
"We will have a significant stressed assets fund," Sinha told reporters on the sidelines of an event by credit ratings agency CRISIL in Mumbai on Tuesday.
"We expect a variety of funds - stressed debt fund, special situations fund, and NIIF (National Investment and Infrastructure Fund) - to then participate in equity investment in these stressed assets," he said, adding that the details were being finalised.
He also said it was prudent for the RBI to continue with an asset quality review of the banks.
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