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

"The biggest contributor in the NPAs is the steel sector. Because if our companies are not able to sell their steel, it is obvious they will not be able to repay bank loans and the interest upon it," Jaitley said replying to the debate on the Finance Bill, 2016-17.

The Finance Bill 2016-17 was on Thursday passed by the Lok Sabha. The Bill now goes to the Rajya Sabha, which has to return it for the budgetary exercise for 2016-17 to get completed.

Jaitley said the Indian steel industry has been weakened by the dumping 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 below average monsoon had an impact on the economy in the last two years and an expected normal monsoon this year will revive the rural economy.

Jaitley also outright rejected suggestions from some opposition members to bring agricultural income under the tax net, saying this is not being considered at all.

He said that, firstly, large farm-based income was rare and people using agriculture as a front to hide income from other sources need to be dealt with by the tax authorities.

The finance minister asserted that despite global recession, the Indian economy is doing well.

He pointed out that despite the global recession and uncertainty prevailing on how long the crisis will remain, India still continues to maintain a high growth rate at 7.65 percent in 2015-16 compared to 7.2 percent in 2014-15.

On the issue of one percent excise duty on non-silver jewellery, the finance minister ruled out its rollback, saying the levy was not applicable on small traders and artisans. Only those jewellers with more than Rs.12 crore turnover will attract the duty, he said.

Responding to criticism that government's steps have often been against people-oriented schemes, Jaitley said: "In all the three budgets this government presented, we tried to ensure that small tax payers have more money in their hands."