Union Finance Minister Arun Jaitley on Tuesday said formaliasation of the Indian economy with the help of Insolvency and Bankruptcy Code, GST, demonetization and digital payments have increased the purchasing power of the country and therefore it should help India sustain a growth rate of around 8 per cent.
“The formalisation of the Indian Economy coupled with inclusive growth through massive financial inclusion, has unlocked purchasing power which will drive India’s growth. This should help India sustain a growth rate of around 8 per cent,” Mr Jaitley said while addressing Chief Executives and other whole-time Directors of Public Sector Banks (PSBs) at the annual review meeting of the PSBs here.
The Finance Minister was highlighting the factors that make for sustained high growth for the country over the next decade.
He said the amendment in the IBC to debar wilful defaulters has had positive consequence in terms of resolution, recovery, provisioning and credit growth. The defaulting borrowers have been stepping forward to make payment in order to participate in the resolution process.
Mr Jaitley also underscored the need to trust and confidence in the banking system as a necessary precondition for meeting the lending needs of the economy.
“With the recent amendment to the Prevention of Corruption Act, there now need not be any apprehension in the minds of bankers in supporting investments that are in the best interests of the economy, the nation and the banks,” he added.
He , however, exhorted the banks to ensure all steps at their end to ensure clean lending and effective action in cases of fraud and wilful default to justify the trust reposed in banks. “Banks must strive to be seen always as institutions of clean and prudent lending.”
Noting the positive results from the IBC mechanism, the Finance Minister flagged the need to assess and revisit the efficacy of the Debts Recovery Tribunal (DRT) mechanism, particularly in view of long lead times in disposal of cases. He underscored the requirement for expediting recovery through the DRT mechanism, so that their original objective of speedy recovery proceedings is realised.
The review meeting came close on the heels of losses incurred by public sector banks, reported frauds and scams, identification of higher NPAs, credit-related issues, markets’ up and down and government-induced consolidation.
Last week, the government proposed the merger of three banks — Dena Bank, Vijaya Bank and the Bank of Baroda — into a strong public lender.