NARCL is not 'bad bank': FM Nirmala Sitharaman

Union finance minister Nirmala Sitharaman on Sunday asserted that the National Asset Reconstruction Company Ltd is not a “bad bank” and is aimed at restructuring and selling the NPAs.

Addressing the 74th annual general meeting of the Indian Banks’ Association, she thanked the IBA for having come together in establishing the National Asset Reconstruction Company Ltd. and India Debt Resolution Company Ltd.

“Working together, NARCL and IDRCL would be able to restructure and sell the NPAs,” she said, adding: "NARCL is not a bad bank".

“It is a formulation which is intended to clean up banks' assets and dispose of NPAs in a speedy manner. The banks are now able to raise money from the market, hence the burden on govt. to recapitalise banks will be less, this is how we want banks to function – a lot more professional, with a changed mindset,” she said.

Sitharaman said that this is absolutely the right time to become professional. Bank valuations should be razor-sharp, enabling you to raise the right kinds of amount at the right cost, she said.

Read | For economy’s sake, ‘bad bank’ must work

The minister underlined the importance and need for Development Finance Institutions, even in the private sector. ”Govt. is coming up with a Development Finance Institution, at the same time, we have made enough provisions for DFIs to come up in the private sector as well. We hope there is going to be good competition between public and private sector DFIs, so that money is available at competitive prices.”

The FM recalled that the Prime Minister has said that there needs to be a change and reset in our mindset and ways of living and hoped that IBA lives up to this invocation. “We are at a very critical stage of the Indian economy, you are the backbone for it, I wish IBA rises to this occasion and provides India the best of financial services.”

The finance minister said that UPI needs to be strengthened. “In the payment world today, Indian UPI has actually made a very big impression. A RuPay card which was not as glamorous as a foreign card is now accepted in so many different parts of the world, symbolic of India's futuristic digital payment intentions.” FinTech understands that UPI is its backbone, you have to give it its flesh and blood, you have to strengthen UPI, the Minister advised bankers.