Banks to focus on top defaulters: Chidambaram

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New Delhi: Concerned over rising bad loans, Finance Minister P Chidambaram on Wednesday asked banks to focus on top defaulters and take action against them.
"You focus on the top defaulters, as well as keep on eye on the top performing accounts... They are keeping a close watch on the top 30 non-performing accounts in each bank and action will be taken on the defaulters," Chidambaram said.
He was talking to reporters after meeting the heads of public sector banks and financial institutions here.
Chidambaram said it is the 30 top non-performing accounts which account for bulk of the NPAs. Non-performing assets of banks have been on the rise for past several months due to slowdown in the economy. The gross NPAs of some public sector banks, including State Bank of India and Punjab National Bank have crossed 4 per cent of the total assets at the end of March, 2013.
Gross NPAs of PSU banks have risen from Rs 71,080 crore as on March 2011, to Rs 1.55 lakh crore as on December 2012.
Chidambaram further said he has asked banks to review their lending rates. "Reduction in base rate will be powerful stimulus to boost credit growth," he said adding that unless the base rate is cut, interest rates cannot be brought down.
While the the RBI has reduced the policy rates by 1.25 per cent since January 2012, to prop up growth, banks have lowered the lending rates by only 0.30 per cent during the period.
Chidambaram further said the banks would open over 8,000 new branches this year and hire over 50,000 people.
At the meeting with the bank chiefs, Chidambaram reviewed the credit to agriculture, MSME sector, housing, education, minority communities and also financial inclusion.