12th July, 2002
Ministry of Finance  


BORROWERS ARE DUTY BOUND TO REPAY THE LOAN: JASWANT SINGH

CONSULTATIVE COMMITTEE OF THE FINANCE MINISTRY MEETS


The Union Finance Minister, Shri Jaswant Singh has said that the borrower must realize that he has a duty to repay the loan. In his first address to the Parliamentary Consultative Committee for the Ministry of Finance, he said that an environment needs to be created for this to overcome high default rate. Shri Singh said, the recent Ordinance on setting up of ARC and Securitization was aimed at providing the Banks/FIs a window to market their NPAs.

The Finance Minister agreed to the suggestion by the members that rural credit delivery network needed strengthening. He announced the setting up of a Committee under the Chairmanship of Minister of State for Finance (E,B&I), Shri Anant Geete to examine the issue and come up with practical suggestions in this regard. Shri Singh felt that the existence of many regulators for similar financial operations like NBFC, Private Companies and Chit Fund Operations caused confusion and created hinderances in checking irregularities. The Secretary (Financial Sector) has been directed to examine if a single regulator was feasible. The Committees are to submit their reports within four weeks.

The Members expressed concern over the high Non-Performing Assets (NPAs) of commercial banks and suggested various measures to tackle the situation. Some of the suggestions included the setting up of a body to look into each case of NPA, going for a negotiated settlement of dues, exemplary punishment for wilful defaulters and strengthening of banks' vigilance system for preventive action. Dr. Manmohan Singh felt that the bankers as well as the regulators cannot afford to be complacent. He said that more attention of banks was needed towards small scale industry, agriculture and rural industry. Some other members also supported the cause of SSI, agro-industry, cooperative banking and rural finance.

All members congratulated the Finance Minister on his appointment and expressed confidence that he would restore the people's trust in the financial institutions.

Among those who attended the meeting included Minister of State for Finance, Shri Anant Geete, Dr. Nitish Sengupta, Dr. Jaswant Singh Yadav, Shri Vijay Kumar Khandelwal, Shri Moinul Hasan, Shri Nawal Kishore Rai, Shri Sontosh Mohan Dev, Shri Mohan Rawale, Shri Parmeshwar Kumar Agarwalla, Shri Lalithbhai Mehta, Shri B.S. Ramoowalia, Shri Abani Roy, Shri Baijayant Panda, Shri Eknath Thakur, Shri Harendra Singh Malik, Shri Lal Jan Basha, Shri Murli S. Deora and Shri Mahendra Prasad.