Reduce NPAs or be ready to lose out on capital infusion: Govt to banks

In a bid to address bad loans issue, the finance ministry has asked banks to step up recoveries if they wanted a share of the Rs 25,000-crore capital infusion, The Economic Times reported on Thursday.

The ministry is holding meetings with individual banks on understanding their plans on capital raising, along with sale of non-core assets. Allahabad Bank, Bank of Baroda and Bank of India are said to have made presentations to the ministry. 

"We are holding consultations with banks on their growth projections, credit disbursement targets and other efficiency parameters such as low-cost deposits. Any capital allocation will be based on their overall performance," an official from the finance ministry told the newspaper.  

There will be substantial weightage on how banks recover non-performing assets when the capital allocation is being worked out, the official added.

The Banks Board Bureau (BBB) is said to be looking at options to help lenders raise money internally and improve its functioning, the publication reported. 

"Some lenders may be asked to focus on specific sectors where they are already strong such as MSME or agriculture lending and accordingly plan their strategy," the official quoted above said.

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