Economy

Union Min Anurag Thakur Asks Banks To Not Refer To The NCLT Regularly

Written By Ankita Chakraborty | Mumbai | Published:

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  • Union Minister Anurag Thakur has stated that the banks should try and resolveĀ loan related issues themselves
  • Thakur emphasized on the usage of NCLT, stating that it should only be used if there is an absence of an alternative

At the 72nd annual general meeting of Indian Banks' Association (IBA), Anurag Thakur, Union Minister of State for Finance and Corporate Affairs stated on Wednesday, September 12, that the banks should try and resolve loan related issues themselves. He notified to the people concerned that National Company Law Tribunal (NCLT) should not be used regularly. He emphasized on the usage of NCLT, stating that it should only be used when there is an absence of an alternative. Thakur further added that only when the banks are not able to reach satisfactory resolutions, the NCLT should be referred. 

'I would request bankers to try and resolve stressed assets in the right earnest and refer cases to NCLT only if satisfied resolution outside the NCLT process is not available.' Thakur proclaimed. 

READ: Merger Of Public Sector Banks A Positive: Infosys Finacle

The Union Minister on Banks and Lenders

The NCLT is a quasi-judicial body. Thakur stated that he does not want lenders to refer to the Insolvency and Bankruptcy Code (IBC) at every instance adding that there should be a structural internal process to retrieve the money first. He assured the banks to loan money out without being fearful of any 'witch-hunting' by any investigative industries. Thakur asked the bankers to report on frauds timely so that actions can be taken against them. Thakur spoke of the 110 basis points repo rate reduction by the Reserve Bank of India and how in spite of it banks have not passed on full benefits to the customers. 

'Only a fraction of the rate cuts benefits were passed-on by the banks to borrowers. I appeal to banks to further pass on the benefits of the rate cuts to companies which will lead to an increase in the consumption cycle, thereby, leading to a revival in their investments.' he stated.

Thakur added that banks are being encouraged to lend more to the NBFCs (Non-bank financial institutions). This will, in turn, improve the availability of credit. He also stated that this would reduce the liquidity crunch. Furthermore, Thakur asked the IBA to look into the transfer policies in the bank, especially for women. He added that if you are going far from home to work and your mind is not mentally there then it is only going to impact the customers. 

WATCH: Nirmala Sitharaman: Bank Merger Won't Lead To A Single Job Loss

Mega-Merger by the Government  

Finance Minister Nirmala Sitharaman had earlier announced the merger of 10 public sector banks into 4 major banks. Sitharaman had stated that the unification of banks would create a strong and competitive banking system. She added that this would prove to be cost-saving. In an effort to end the economic stagnation, the government has proposed the merger of public sector banks to boost the economy.

WATCH: Nirmala Sitharaman Announces Four Major Bank Mergers: Full Details

(Inputs from PTI)

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