Centre drafting pan-India law to deal with chit funds: Jaitley

Paterniano Del Favero
Agosto 4, 2017

State Bank of India's decision to cut the interest rate on savings accounts of less than Rs 1 crore, has come in for praise from Finance Minister Arun Jaitley, who said the move was in sync with the reduction in lending rate.

Earlier on Thursday, replying to the debate on the Banking Regulation (Amendment) Bill, 2017, Jaitley said this pension scheme for senior citizens run by the Life Insurance Corporation will dissuade people from putting their savings in chit funds. "We need to save the companies, the jobs and we need liquid companies to pay the banks", he said. "I'm sure they will take up more case", he said, referring to the 12 non-performing assets (NPAs) that have been identified for action by the National Company Law Tribunal (NCLT). He said defaulting companies can not ask why it was being targeted when some other defaulters were being let free. RBI has taken up some hard cases. These are not routine NPAs.

The Minister said that the loans, which have turned NPAs, were probably given at a time when the economy was in a "boom" period and they seemed good investment proposals.

"When lending rates go down, the borrowing rates will obviously come down". It will select defaulter, direct banks to move expeditiously against the defaulter. "This process will recover the public money, so no one should have objection", he added.

About bad loans, he said, "We will shortly see the process of resolution coming..."

Winding up the debate on the bill, Jaitley said some laws were outdated and were acting as "impediment" instead of "expediting resolution". Jaitley said while the private sector concentrates on retail lending for auto and home loans, public-sector banks have been much ahead in lending to infrastructure sector for the overall growth of the economy.

He said most of the NPAs were build up due to sectoral stress in steel, road, power and infrastructure sectors.

He said the Securities and Exchange Board (Sebi) was looking into it. One of the reasons why this is not happening is the fear of the language of section 13 of the Prevention of Corruption Act. "This process had to be broken".

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