Working on plan to rebuild capacity of banks: Jaitley

Washington, October 12

Finance Minister Arun Jaitley has said the government, faced with a “catch-22 situation” over the issue of non-performing assets, is working on a plan to rebuild the capacity of India’s banking sector so as to support growth.

Jaitley, who is on a week-long visit to the US to attend the annual meetings of the International Monetary Fund and the World Bank, also said reforming the banking system is the top agenda of the government.

“Today, with global growth turning around, we are working to put up an actual plan in play to deal with the banking situation, which is top of our agenda. We need to rebuild the capacity (of the banking sector),” Jaitley told students of Harvard University in Boston.

“I inherited a banking system whose monies were lying in non-performing assets...are unable to service the debt. We are faced with a catch-22 situation as to how do we improve the capacity of the banks so that they can support growth,” he said.

So, all these factors together adversely impacted the private sector, the minister said. Jaitley, however, also noted that bigger enterprises did not suffer, because they approached the bond market and foreign funding which were available at much cheaper rates. — PTI