New Delhi, May 5 (IANS): The steel industry accounts for the largest proportion of the banks' non-performing assets (NPAs), Finance Minister Arun Jaitley told the Lok Sabha on Thursday.

"The biggest contributor in the NPAs is steel sector. Because if our companies will not be able to sell their steel, it is obvious that they will not be able to repay bank loan and the interest upon it," Jaitley said. 

Weakened by the dumping into India of Chinese steel at below cost-level prices, the sector has in turn affected the banks' balance sheets, he said.

"When the business cycles are weak in some sectors during global headwinds, then not only the sector goes weak, but it affects the banks' balance sheets. It is called twin balance sheet problem," Jaitley said.

Some loans which have turned bad might have been given on a wrong basis, and such cases will be investigated, the minister said.

"(Out of) the current NPAs ... there are some which have been given on a wrong basis. It will be investigated into ... I do not want to go into the details of who was responsible for the same," he said.

Jaitley said the government was committed to bringing the banks out of the financial crisis and the NPA issue can be resolved only if the bad assets are reflected properly on the balance sheets, and not kept hidden. 

The top 50 defaulters of public sector banks had exposure in excess of Rs 1.21 lakh crore as on December 2015, the Minister of State for Finance Jayant Sinha had told Parliament on Tuesday. 

Jaitley said: "We are working upon making laws for the banks to deal with the current situation of rising NPAs. Bankruptcy Bill has already been tabled in the Parliament."

The finance minister also said that the below average monsoon had an impact on the economy in the last two years and an expected normal monsoon this year will revive rural economy.