Concrete steps taken by the government and the RBI have helped banks recover over Rs 8.6 lakh crore of bad loans in the last eight financial years, the government informed Parliament on Monday.
Bhagwat Karad, Minister of State for Finance, in a written reply to a question in the Lok Sabha, said the occurrence of Non-Performing Assets (NPA) is normal, though it is an undesirable consequence for the banking business.
Several factors, including the prevailing macroeconomic conditions, regional issues, global business environment, delays in stress recognition by banks, aggressive lending during the boom, unfair risk pricing and poor credit underwriting, were attributed to the NPA build-up, he said. It was, he said.
“The Government and the Reserve Bank of India (Reserve Bank of India) regularly issue guidelines and address the long-standing stressed assets on the books of banks as well as timely identification and mitigation of defaults on immediate stress identification and mitigation. Several initiatives have been taken with the aim of taking corrective action for the same,” Mr. Karad said.
These measures complement the statutory provisions already available to lenders for recovery and resolution, including the Recovery of Debts and Bankruptcy Act, 1993, the Securitization and Reconstruction of Financial Assets and Security Interest Act, 2002 and the Insolvency and Bankruptcy Code, 2016 ( IBC). ), said the minister.
“Consequent to the comprehensive steps taken by the Government and RBI to investigate and bring down the NPA cases, Scheduled Commercial Banks (SCBs) recovered ₹8,60,369 crore from NPAs in the last eight financial years (Provisional Data) ,” said Mr. Karad.
He said that with IBC there has been a change in the credit culture and under this resolution plans have been approved in 480 cases by March 2022, in which ₹ 2.34 lakh crore can be recovered by the financial creditors.
In addition, the Central Repository of Information on Large Credit (CRILC) was set up by the RBI to collect, store and disseminate credit data to lenders, and banks would be required to submit reports to the CRILC on a weekly basis in case of any defaults. was required to do. Borrowing institutions with exposure of ₹ 5 crore and above, he said.
Among others, willful defaulters and companies with willful defaulters as promoters/directors were barred from accessing the capital market to raise funds and the jurisdiction of the Debt Recovery Tribunal (DRT) to enable DRT was restricted to ₹10. lakh was increased from ₹ 20 lakh to ₹ 20 lakh. To focus on high value cases, resulting in higher recoveries for banks and financial institutions.
Six new DRTs were also set up to expedite the recovery.
Mr Karad said that all credit institutions were mandated by the RBI to become members of all Credit Information Companies (CICs) and to submit credit information, including historical data relating to borrowers, to the CIC, and the data was to be updated regularly. and had to be shared with other credit institutions.