Jaitley calls for strengthening banks by reducing NPAs to drive economic growth

Mr. Jaitley calls for strengthening the banking system by minimizing the NPA but the question worth discourse is - how much is it justified Central government pumping money to save public sector banks?

Finance Minister Arun Jaitley on Sunday said that the banking system needed to be strengthened to meet the market's liquidity requirements and drive economic growth.

Jaitley was speaking via video-conference at an event here to mark the 100th anniversary of the Union Bank of India.

According to the Minister, it is important that the NPA (non-performing asset) levels at banks are minimized and that the Insolvency and Bankruptcy Code is showing results.

He further said that it is only through the banking sector that lending can be provided to sectors such as the MSMEs and NBFCs.

The central government has in the last four years pumped Rs 70,000 crore and Rs 2.12 lakh crore into state-run banks in separate tranches to help the bad debt-laden lenders, he said.

These steps to infuse capital have improved the banks' lending capacity, on which the future of economic growth depends, he said.

Jaitley added that policies have to be targeted towards improving the lending capacity of the banking system and to improve liquidity available for the markets.