new delhi rajiv takru financial services secretary in the finance ministry does not mince his words in an interview to toi he says wilful defaulters will be sternly dealt with and assures that the banking sector is sound and there is no cause for alarm over rising bad loans excerptswhat are your views on the mounting bad loans in the banking sectornonperforming assets npas are something that nobody would like to encourage and certainly we are not interested in encouraging them or in supporting them or holding out a fig leaf of an apology on behalf of npas there are reasons why they suddenly appear to have grown we have created a system of systembased npas which means the system itself throws up npas now that systemgenerated npas have started coming out some balance sheets have taken a hit there are two other reasons the state of the economy and the environmental factors there were projects which got stalled because mining got into difficulty a project that was based on domestic coal suddenly found that it had to operate on imported coal now imported coal was costing around 100 more so the projects economics went completely out of gear another environmental factor that affected power projects in particular was that some of the discoms were not paying their bills a lot of people got into trouble because of factors completely beyond their control so that was the case of large projects which have to be dealt with separately and they have to be provided for as per rbi normsand wilful defaulters there are people who thought they could get away with default they thought so many guys are going for cdr corporate debt restructuring at this time why shouldnt i also go for cdr i dont think we are going to be kind i have been saying that we have to be as harsh as possible with them a promoter must either shape up or ship out we have discussed it with the banks there is absolutely no confusion on that score this is something which is going to be implemented if there is a case of a wilful defaulter which we come to the conclusion as lenders that it is something that is deliberately created then that person has to be prepared now to surrender his project he has to get out otherwise he has to salvage the project himself we wont give indefinite extensionsis the situation on the npa front alarming it is absolutely not alarming there is no question the banks are well capitalized about rs 37000 crore was the income generated by banks last year which they pumped back into the business and we put in rs 12500 crore so last year itself about rs 50000 crore was put into banks as additional equity and accruals this year we are putting in rs 14000 crore so there is nothing alarming at all we know the problem recoveries have taken place wellsome staterun banks