New Delhi, Nov 28 - Finance Minister Arun Jaitley on Tuesday denied that the government had waived off bank loans of big capitalists and asserted that proceedings had been initiated against 12 largest defaulters for time-bound recovery of dues totalling Rs 175,000 crore.
"Over the last few days, a rumour is being propagated regarding waiver of loans of capitalists by banks... Government has not waived any loans of big NPA defaulters," he said in a blog post.
"On the contrary, under the new Insolvency and Bankruptcy Code, cases have been instituted in the National Company Law Tribunal for time-bound recovery from 12 largest defaulters in six to nine months (to the tune of) Rs 1,75,000 crore," he said.
Responding to criticism on recapitalization of banks, Jaitley said it did not mean waiving the NPA loans and that public sector banks had been provided capital in the past as well.
"During 2010-11 to 2013-14 too, the government provided banks an amount of Rs 44,000 crore for recapitalization. Was that also for waiving off loans of capitalists?"
The Minister accused the erstwhile UPA government for the NPA crisis and said state-run banks disbursed disproportionate sums of loans to several industries between 2008 and 2014.
"The public needs to ask the rumour mongers at whose behest or under whose pressure were such loans disbursed. They should also be asked that when these debtors delayed in repayment of their loans and interest thereon to Public Sector Banks, what decision was taken by the then government," Jaitley said.
Instead of taking a firm decision with regard to such debtors, the UPA government kept these defaulters as non-NPA account-holders and kept the loss to banks hidden, he said.
"The banks kept giving loans repeatedly to these debtors and kept ever-greening the loans."
He said that through correct recognition of NPA, the NPA amount of Public Sector Banks rose from Rs 278,000 crore in March 2015 to Rs 733,000 crore in June 2017, "thereby meaning that those loans of about Rs 454,466 crore, which were actually fit to be NPA and were under the carpet, were recognised.
"At the same time, banks were given necessary capital so that Public Sector Banks become strong and capable of contributing to nation's development," he said.
Jaitley said the government decided to go for capitalizing state-run banks with an aim to increase credit off-take and create jobs.
According to the government's plan, Rs 211,000 crore would be infused into the banking system within two financial years with maximum allotment in the current year.
This would be arranged through Rs 135,000 crore of recapitalization bonds and Rs 18,139 crore of budget provision, with the balance coming from raising of capital from the market by diluting government shareholding.
"Through capital infusion, banks weakened by NPAs would become strong and capable of raising adequate capital from the market. For receiving this capital, banks will have to carry out several reforms so that such situations do not recur," Jaitley added.