The minister, who reviewed the performance of public sector banks, expressed satisfaction over credit growth and assured the lenders the government will finalise modalities for Rs 14,000 crore of capital infusion within a week.
Seeking to dispel the impression of subdued economic activity, Chidambaram said, "...things are not as gloomy as sometimes it is painted. There are new proposals, they are being cleared...things are moving. Thanks to the CCI, PMG and thanks to investors themselves."
Clearance of projects by the Cabinet Committee on Investment (CCI) has spurred lending activity, he said, adding "Even though there is a slowdown, in the current fiscal year we have got 173 new proposals each with over Rs 250 crore investment. These are being processed."
Although rising non-performing assets (NPAs) are a function of economic slowdown, Chidambaram said they are "unacceptable" and banks should beef up efforts by setting up a separate vertical to recover dues from written-off accounts.
"We are monitoring the top 30 NPA accounts in each bank, each zone. It is a matter of concern that it is the big borrowers (with loans of over Rs 1 crore) who are defaulting," Chidambaram said.
The bulk of the NPA was from those who borrowed Rs 1 crore and more, he said, adding, "We have told them to keep a very close watch on these largest accounts and have to recover the amount...I hope recoveries will improve."
As of June, the gross NPA of nationalised banks was 3.89 per cent and State Bank Group at 5.50 per cent of total advances.
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