NEW DELHI: Heads of top ten state-run banks met finance minister Arun Jaitley on Monday to raise concerns over aggressive investigation into non-performing loans which they said has impacted business.A senior bank official said the meeting was sought by bankers through the Indian Banks’ Association (IBA) owing to widespread fear among bankers after arrest of former bank officials in the case of Kingfisher loans.“There is almost a banking paralysis in public sector banks . We were looking to seek assurance from the finance ministry that there will be no witch-hunt,” said the official, who sought anonymity.A finance ministry official, however, said the meeting was held to take stock of the banking sector and steps taken to reduce non-performing loans.“A host of issues came up for discussion, including capital needs of banks and implications of GST,” said a ministry official. He said Jaitley also discussed the problems faced by banks in faster resolution of stressed assets. CBI raised queries about how the bank lent money to the company that was rated below investment grade.“We are not looking at consolidation among public sector banks till the situation of bad loans improves,” said the ministry official cited earlier.The government will now look at a new strategy to divest its stake in IDBI Bank, he said. Bankers said at the meeting that often they are faced with the difficult decision of pulling back their investment from a struggling company at the risk of sinking it or lending more to salvage earlier lending.

Source: Economic Times February 20, 2017 19:18 UTC