Banks doing all to recover KFA loan: SBI

TALKING TOUGH

Chaudhuri Tells FM Bankers Assessing Airline's Securities That Can Be Auctioned

New Delhi: Finance minister P Chidambaram, at a meeting with the heads of PSU banks and financial institutions on Monday, said rich promoters of sick companies must be made to pay up dues. Although he did not name anyone during the closed-door meeting, he dropped enough hints to signal who he was referring to. 
    Almost immediately, SBI chairman Pratip Chaudhuri responded by saying lenders are taking all steps to recover the loan provided to Vijay Mallya's Kingfisher Airlines. "We are blazing all guns and taking all steps to recovery," Chaudhuri said. The SBI chief said the core group of bankers is assessing the securities that can be sold to quickly put up for auction. 
    Although bankers agreed to recall loans given to Kingfisher several weeks ago, banks are in the process of initiating action. State-run banks that have an exposure of over Rs 7,000 crore are seen to have responded rather slowly to the deterioration of Kingfisher Airline's financial health even as Mallya's lifestyle has seen little change. 
    The FM's green light comes amid signals of rising bad debt in the banking system which, if left unchecked, will impact the health of the banks. The gross stock of NPAs of public sector banks have more than doubled from Rs 71,000 crore at the end of March, 2011, to Rs 1.5 lakh crore on December 31, 2012. Of this, about 172 corporate accounts were NPAs of more than Rs 100 crore each at the end of last December. The amount involved in such cases is of the order of Rs 37,000 crore. 
    Chidambaram made it clear that restructuring cannot be a one-sided affair with only banks taking a hit. "Promoters have to bring in additional money and companies have the duty to pay back loans," he said. Commenting on the same, finance services secretary Rajiv Takru said, "We are trying and banks are also trying to make a distinction between willful defaulters and people who are genuinely stressed and who have genuine problems." 
    Chidambaram said recovery has improved in the past month or two and banks should take more steps to deal with rising NPAs. Terming stalled projects as worrying, the FM said steps were being taken to ensure impediments were removed and credit flow took place. As many as 215 projects with an investment of Rs 7 lakh crore are stalled and banks have disbursed about Rs 54,000 crore loan towards them, he added.