Indian economy to grow at 8 pct: Jaitley

Union Minister of Finance and Corporate Affairs Arun Jaitley said the Formalisation of the Indian Economy through the Insolvency and Bankruptcy Code (IBC), GST, demonetisation and digital payments have enabled better assessment of financial capacity and risks, and coupled with inclusive growth through massive financial inclusion, has unlocked purchasing power which will drive India’s growth.

The Finance Minister said that this should help India sustain a growth rate of around 8%.

A growing economy will also help banks grow in strength, he added. Conversely, as lifelines of the economy, banks would need to build their strength to support the lending needs of a growing economy.

The Finance Minister was addressing the Chief Executives and other whole-time Directors of Public Sector Banks (PSBs) at the Annual Review Meeting of the PSBs in New Delhi on Tuesday.

The Finance Minister was, highlighting the factors that make for sustained high growth for India over the next decade.

While noting the positive results from the IBC mechanism, the Finance Minister, Shri Jaitley also flagged the need to assess and revisit the efficacy of the Debts Recovery Tribunal (DRT) mechanism, particularly in view of long lead times in disposal of cases.

He underscored the requirement for expediting recovery through the DRT mechanism, so that their original objective of speedy recovery proceedings is realised.

The Finance Minister noted that the perception regarding the health of PSBs has become more positive as banks have posted positive results in terms of resolution, recovery, provisioning and credit growth.

The Finance Minister said that the Amendment of IBC to debar wilful defaulters has had the unintended positive consequence of defaulting borrowers stepping forward to make payment in order to participate in the resolution process.

The Finance Minister also noted the continued relevance of PSBs in the Indian context, in view of their development contributions and to support financial inclusion. In this regard, he noted that support for non-retail banking from other lenders continues to be insufficient.

Jaitley also underscored the need to trust and confidence in the Banking System as a necessary precondition for meeting the needs of the economy.

With the recent amendment to the Prevention of Corruption Act, there now need not be any apprehension in the minds of bankers in supporting investments that are in the best interests of the economy, the nation and the banks.

At the same time, he exhorted the banks to ensure all steps at their end to ensure clean lending and effective action in cases of fraud and wilful default, to justify the trust reposed in banks. Banks must strive to be seen always as institutions of clean and prudent lending, the Finance Minister concluded.