Farm loan waiver: Jaitley says states should generate own funds

On the farm loan waiver announced by the Maharashtra government, Finance Minister Arun Jaitley made it clear that states which want to go in for waiver will have to generate funds from their own resources.

He was taking stock of the finances of public sector banks as also the resolution of bad loans or NPAs, with heads of the lenders. Besides NPA resolution and bank finances, the meeting also featured the government’s financial inclusion schemes.

RBI, Jaitley said, is in an advanced state of preparing a list of bad loans where resolution is required under the insolvency and bankruptcy rule. Also, the government is actively working on consolidation of state-owned banks.

Public sector banks made a “stable operating profit” of Rs 1.5 lakh crore in 2016-17 and had a net profit at Rs 574 crore after making due provisions. The finance minister observed that there are challenges to credit growth and speedy resolution for all pending NPA cases is the need of the hour.

“The RBI is at a fairly advanced stage of preparing a list of those debtors where a resolution is required through the IBC (Insolvency and Bankruptcy Code) process and you will shortly be hearing about it,” he told reporters after the meeting.