The Finance Ministry on Thursday said the bad loan situation of public sector banks (PSBs) has stabilized and steps are being taken to strengthen them.

"I will tell all investors that this is good news, not bad news because effectively what it means is that we have got the NPA problem well in hand. We know the stock of stressed assets is about Rs 8 lakh crore. That number has stablilised," Minister of State for Finance Jayant Sinha said.

Speaking to reporters on the sidelines of a function to mark Founder's Day of the Central Revenue Sports and Cultural Board, Sinha said the ministry and the Reserve Bank are working closely to fix the problem of non-performing assets (NPAs).

RBI has been conducting its asset quality review and stress tests.

"So, all of this has been under way for a long period of time. We have said over and over again that we are undertaking all the measures necessary to support our banks which means both in terms of capital as well policy measures," Sinha said.

The country's largest lender, State Bank of India, today reported a sharp decline in net profit and another state-owned lender Bank of India suffered losses in the third quarter of the current fiscal, a proof that NPAs are taking a toll on their bottom lines.

Several other large PSU banks like Punjab National Bank and Union Bank of India too have reported decline in net profit.

On the poor show, Reserve Bank Governor Raghuram Rajan in Mumbai said today there won't be a repeat of the asset quality review (AQR) that has shaved off banks' bottom lines and led to battering of banking stocks and a massive erosion in investor wealth.