Finance Minister Arun Jaitley on Monday asserted that the problem of bad loans in the banking system is not "insurmountable" for a large economy like India as it is limited to only 20-30 big accounts.
New York: Finance Minister Arun Jaitley on Monday asserted that the problem of bad loans in the banking system is not "insurmountable" for a large economy like India as it is limited to only 20-30 big accounts.
Speaking at the Council on Foreign Relations here, the minister, however, said the problem of non-performing assets (NPAs) has "just persisted" too long and is certainly adversely impacting the banking system.
The NPAs are not spread over hundreds of thousands of accounts, Jaitley said, adding that its resolution is "our top priority at the moment" as it will encourage private investments.
The defaulting companies will have to find partners and go in for either change of management or search of investors, he said, adding that some precipitative action will have to be taken.
"This may also involve some hair cuts by the banks, which would be a bona fide commercial consideration and it's not impossible for a large economy like India to resolve 20-30 (NPA) accounts. It is not an insurmountable problem," he said.
He further said one constraint is that banks are not able to take "bold decisions" because the anti-corruption laws of pre-liberalisation era.
Jaitley, who is on an official visit here, said that because of the combined impact of the GST, demonetisation and several other steps by the government, revenues in India are increasing quite rapidly.
"In the last three years, despite global slowdown, India has consistently seen 15-18 per cent annual revenue growth which is quite significant. I do see over the next several years, this revenue growth, particularly as a result of the GST and anti-evasion measures we have been taking, rapidly increasing," he said.
On the outcome of the demonetisation move, Jaitley said: "The final score card will take a long time. Because unlike any other developed economy where you think in terms of replacement of currency, in the Indian context, besides issues like terror funding and counterfeit currency, one big reason was tax non-compliance."
He also said the GST will make the generation of cash quite difficult as the government is focusing on digitisation of the economy.