Arun Jaitley, who supports RPPs on NPAs, says the reduction in bad debts alone will guarantee the flow of credit

It is interesting to note that the last release from the Minister of Finance is in progress. This is in line with the RBI's determination on the issue, which is insistent on action on highly performing non-performing badets (NPAs).

The apex bank was also opposed to the government's request to impose special exemptions for SMEs, NBFCs and the energy sector. to help stimulate growth before the crises from April to May.

"To maintain the strength of our banking system and enable it to help grow the economy, we must minimize our NPAs," said Jaitley in a speech to the 100 day foundation of the public bank Union Bank of India, Sunday evening, by videoconference

"Only a strong banking system can improve credit in the sectors that really need it. The MSME sector (micro, small and medium enterprises) needs credit, several other market players need credit. NBFCs are in need of credit today, because they are doing a lot of their loans, "he added.

It can be noted that from March, the ratio of Doubtful loans at the system level had been sniffed at 12%, while in some reputable lenders like IDBI Bank, bought by LIC, had already used nearly 28% of its loans in June.

Following a sharp rise in bad debts, which was accelerated after the Notable Prohibition and Early Implementation of the GST, the RBI had submitted in September 2016 to 11 state-run banks in as part of a corrective action plan to reduce NPAs.

This has led to a tightening of credit in the economy as these banks collectively control one-fifth of the credit and deposits in the economy. system level, and small units are the most affected by the crisis

"Liquidity on the markets is maintained," said the minister. 19659004] In March 2018, NBFCs controlled more than 13 percent of the system-wide credit market.

"We must target and target our policies; the whole system needs to focus on the direction in which we are improving the lending capacity of our banks and the liquidity available with respect to our markets, "said Jaitley.

According to reports, non-governmental authorities named S Gurumurthy , the official director of the RBI's central board of directors, had requested the abstention of the MSMEs as well as an increased flow of credits in other critical areas.

In addition, D & B Other reports indicated that the government wanted the RBI to open a special refinancing window for NBFCs, mutual funds and housing finance companies that have been experiencing stress since lender failures infra IL & FS. 19659003] Jaitley, however, did not address other contentious issues, such as the transfer of RBI's surplus capital to the government or the dilution of the Prompt Corrective Action (PCA) for certain sectors, such as power, partly related to NPAs or the reduction of banks' capital reserves.

According to sources, the three letters that the government sent to R. BI on October 10, the Ministry of Finance had listed a dozen requests under section 7 of the RBI Act, never before used before. Other demands include a more active council by reducing the powers of the Governing Board of the Central Council, which is populated by the governor, his four deputies and certain general managers.

Jaitley limited his comments on MPAs and the role he could play.

"The future of our economy and growth depends on this lending capacity," he said, adding that the "immediate goal" should be to strengthen the banking system that is mired with more than Rs 10.5 lakh. in the NPAs, accounting for nearly 12% of all bank badets.

Jaitley stated that many options have been exercised, few results have been achieved and the "experiments" currently underway are yielding results.

"From the IBC also shows positive results, he said.

The Minister reiterated his comments on the excessive loans made between 2008 and 2014 as the reason for the high interest rates currently in effect, and described their concealment as "fatal" and "pre-meeting" (19659003) Last month, Jaitley criticized the RBI for "turning a blind eye" when banks lent indiscriminate loans in 2008-2014.

On Sunday, Jaitley also thanked the Monetary Policy Committee (MPC) for the good work done by the latter and hoped that it would continue to improve it.

Relations between the RBI and the Ministry of Finance have deteriorated in recent years. months, after the North Block began consultations under Article 7 of the RBI Act, which has never been used, provides for the government to order the central bank to take certain measures. public interest.

RBI with nearly a dozen requests to which it was answered in a week.

The election-related government wants first and foremost that the RBI help troubled non-bank lenders obtain cash support, liberalize PCA standards, and undertake others. measures that will help stimulate growth, while the RBI would adopt a conservative stance and avoid any negative precedent.

The perceived capital surplus of the RBI also became a contentious issue, a report reporting that the government was considering a third.

Secretary of Economic Affairs, SC Garg, denied the amount, but indicated that a discussion was underway on an "appropriate economic capital framework" for the RBI.

The central bank issued reservations on various public issues in a speech delivered by deputy governor Viral Acharya on Oct. 26, in which he warned investors of anger if the autonomy of the RBI was compromised.

After the publication of action-related information under section 7, the government had attempted to alleviate tensions by declaring that autonomy is "essential" and constitutes a requirement of governance saved.

However, Garg was also mocked by Acharya's "angry markets" remark, highlighting the improvement in the financial markets. e speech.

The RBI's board of directors is due to meet again on November 19, while many expected a stormy meeting.