Amid rising concern over default by large borrowers like liquor baron Vijay Mallya, Prime Minister Narendra Modi stressed that the government as well as RBI is taking “tough action” to recover loans from corporate defaulters.

“The only segment showing an increase in (corporate rating) downgrades is highly leveraged large firms. The government and Reserve Bank have taken tough action to recover dues from large corporate defaulters. Perhaps the noise from this segment has influenced media perceptions,” he said at the Bloomberg India Economic Forum on Monday.

Gross Non-Performing Assets (NPAs) of public sector banks (PSBs) increased from Rs 2,67,065 lakh crore in March last year to Rs 3,61,731 lakh crore in December.

There was an increase of Rs 94,666 crore over the nine months of the current fiscal.

The gross NPAs of PSBs increased from 5.43% as on March last year to 7.30% in December.

Even Finance Minister Arun Jaitley in a stern warning to wilful defaulters had said they should settle dues honourably with the banks or else be ready to face “coercive action” by lenders and investigative agencies.

“I don’t want to make any comments on individual cases but I think it’s a responsibility of large groups like his (Vijay Mallya’s) to honourably settle their dues with the banks,” he said.

Prime Minister said there has been a smart pickup in credit growth after September.

“Credit off-take between February 2015 and February 2016 increased by 11.5%. The overall fund flow to corporate sector through equity and borrowings of various kinds, domestic and foreign, has increased in first three quarters of 2015-16 by over 30%,” he said.

The government, Modi said is also trying to strengthen the monetary policy mechanism.

“Last year, we entered into a Monetary Framework Agreement with Reserve Bank of India. This year we have introduced in the Finance Bill amendments to Reserve Bank of India Act,” he said.

Under these amendments, RBI will have an inflation target and will set monetary policy through a Monetary Policy Committee, he said.

“The committee will have no members from the Government.

Through this reform, monetary policy will acquire an inflation focus and a level of institutional autonomy unprecedented in major emerging markets, and greater than several developed countries,” he said.

With regard to Pradhan Mantri Mudra Yojana, Modi said over 31 million loans have been sanctioned to entrepreneurs for a total value of nearly 19 billion dollars this year.

“You will be pleased to know that 77% of these entrepreneurs are women and 22% of them are from the Scheduled Castes and Scheduled Tribes,” he said.

“Even if we assume conservatively that on average, each enterprise creates just one sustainable job, this initiative itself amounts to 31 million in new employment,” he said.

The Stand Up India scheme will also provide 250,000 entrepreneurship loans to women and Scheduled Castes and Scheduled Tribes, he said.

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