A recent press report said that Finance Minister, Mr. Pranab Mukherjee, has asked public sector banks (PSBs) to apply due diligence in sanctioning of new loans.
Reports said that the gross NPA level in the banking system has gone up from Rs 59,927 crore as on March 31, 2010 to Rs 74,617 crore as on March 31, 2011.
Mr. Mukherjee told the press that the chiefs of public sector banks were advised to apply due diligence for fresh sanction of loans, but also ensure a mechanism through which this growth of NPAs is arrested and there is no further enhancement of NPAs.
Reports said that the finance minister pointed to the moderation in credit growth in the last quarter even as he congratulated the bank chiefs for the significant credit growth of 22.44 per cent recorded by PSBs in 2010-11. He said that he was happy about the rise in the number of education loan accounts, which had more than doubled in the last five years. He also said that the outstanding loan amount has more than tripled in the same period.
Mr. Mukherjee said that delay in sanction and disbursement of educational loan must be avoided. He said that model scheme being revised by the Indian Banks Association (IBA) in consultation with the Finance Ministry should provide for time-bound disposal of applications and effective grievance redressal system.