Observing that the time has come for the nation to be apprised of facts in this regard, he said one should ask at whose behest the loans, which have turned NPAs were disbursed between 2008 and 2014 by public sector banks.
"The public needs to ask the rumour mongers at whose behest or under whose pressure were such loans disbursed. They should also be asked that when these debtors delayed in repayment of their loans and interest thereon to public sector banks, what decision was taken by the then government," the finance minister said.
Jaitley said that rather than taking firm decision against debtors the then government relaxed the loan classification norms to keep defaulters as non-NPA account holders.
The asset quality review (AQR) carried out for clean and fully provisioned balance-sheets in 2015 revealed high NPA, the finance minister said.
As a result, he said, loans of about Rs 4,54,466 crore, which were actually fit to be NPA and were under the carpet, were recognised after intensive scrutiny under AQR.
"Government has not waived any loans of big NPA defaulters ...," he said, adding under the new Insolvency and Bankruptcy Code, cases have been instituted in the National Company Law Tribunal (NCLT) for time-bound recovery from 12 largest defaulters.
These 12 defaulters account for non-performing assets totalling Rs 1.75 lakh crore.
Cases for the recovery of NPA dues from the assets of these big defaulters are underway at various stages.
Jaitley further said with the object of increase credit off-take and creation of jobs, government has taken "the big decision" of capitalising state-owned banks.
Under this, with maximum allotment in the current year, capital increase of Rs 2.11 lakh crore would be effected within two financial years.
"Through capital infusion, banks weakened by NPAs would become strong and become capable of raising adequate capital from the market," Jaitley said.
For receiving the capital, banks will have to carry out several reforms so that such situations do not recur, he added.
Jaitley further said through strong steps taken over the last three years, "not only have the problems received as legacy" been addressed but also reforms for rebuilding the strength of public sector banks have been boosted.
The minister said that the process of creation of strong and large banks began with the integration of State Bank of India, and the recapitalisation announced will bolster this process.
"While honest businesspersons will be able to access loans from strong and reformed banks, strict and clear law and the all-round clean-up initiated by the government would result in a clean system in the country," Jaitley added.
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)