Relief for loan defaulters? Piyush Goyal bats for easier bad loan norms, says every default not NPA on 90th day

Piyush Goyal on Friday said that if a borrower does not get its dues from entities like discoms, it should not lead banks to classify that borrower automatically as a defaulter.

Goyal was speaking to industry representatives in a post-budget interaction at the BSE. (Image: PTI)

Mumbai: Batting for ease in norms for recognition of non-performing assets (NPAs), Finance Minister Piyush Goyal on Friday said that if a borrower does not get its dues from entities like discoms, it should not lead banks to classify that borrower automatically as a defaulter. Goyal’s statement can be touted as a big relief for borrowers who are not able to repay their loan EMIs in 90 days. “Law cannot be blind, wherein in 90 days arithmetically it becomes an NPA (Non-performing asset). We will also discuss this and we hope to resolve it quickly,” Goyal said while speaking to industry representatives in a post-budget interaction at the BSE in Mumbai. The Finance Minister also cited the case of a power producer to which a distribution company owed money and said that just because the discom did not pay up, the power producer does not become a defaulter. Goyal’s comment came just a day after the Reserve Bank of India (RBI) made it clear that it is not having a relook at a contentious circular about recognising of bad assets, issued on February 12 last year. “I think it is worth discussing with the Reserve Bank that if a payment is overdue and discom is not paying its bill, then we will have to think about NCLT and NPA,” Goyal added. However, some sections of the industry have recently moved the Supreme Court (SC) seeking special treatment to the power sector when it comes to the classification of NPAs. Exhorting the industry to report any such instances, Goyal said the government could ensure capital markets watchdog Securities and Exchange Board of India (SEBI) withdraws a proposal to disclose every default by listed companies and hinted that similar measures will be taken up with RBI as well. Further speaking about the need for specialised development finance institutions like IDBI, IFCI and ICICI, he said that asset-liability mismatch results in difficulties for the banking system to support the infrastructure sector. The Finance Ministry is also trying to get the remaining eight banks out of the restrictive prompt corrective action (PCA) framework, he added.