Christine Lagarde, IMF Chief
Christine Lagarde, IMF Chief

The RBI efforts to deal with the state-run banks’ huge non-performing assets (NPAs) or distressed loans are steps in the right direction, International Monetary Fund (IMF) managing director Christine Lagarde said on Sunday.

“The (move of) Reserve Bank of India governor (Dr Raghuram Rajan) addressing bank balance sheets is absolutely right,” she said at the Advancing Asia conference here, co-hosted by the union government and the IMF.

Lagarde said the Indian government was also moving to get a bankruptcy and insolvency law enacted to address the bad loans problem.

Addressing the conference earlier on Sunday, Finance Minister Arun Jaitley said the government hopes to enact the bankruptcy and solvency as well as the Goods and Services Tax bills in the second half of the budget session of parliament beginning April 20.

The NPAs of public sector banks (PSBs) have increased by close to Rs.1 lakh crore in the first nine months of the current fiscal, parliament was told earlier this week.

“The gross non-performing assets of the PSBs increased from 5.43 percent as of March 2015 to 7.30 percent as of December 2015,” Jaitley told the Rajya Sabha in a written reply.

In money terms, gross NPAs of state-run banks increased from Rs.2,67,065 crore in March 2015 to Rs.3,61,731 crore in December 2015, he said, which was an increase of Rs.94,666 crore over nine months of the current fiscal.

Meanwhile, Lagarde told reporters here on Sunday that the central American nation of Cuba has not yet made a request for IMF membership, and that such a request will be considered in accordance with the norms of the multilateral lending agency.

Cuba was one of the founding members of the IMF until it left the organisation in 1964, following crisis with the US.