In a major success for the Narendra Modi government, during the last nine fiscal years, scheduled commercial banks have recovered approximately Rs 10 lakh crore, as per the government’s information to the Lok Sabha.
In a written response to a question in the Lok Sabha on Monday (July 24), Minister of State for Finance Bhagwat Kisanrao Karad stated that according to the Central Repository of Information on Large Credits (CRILC) data, the amount owed by scheduled commercial banks (SCBs) to corporate company borrowers who are classified as non-performing assets (NPA) and have an outstanding amount of Rs 1,000 crore or more was Rs 1,03,975 crore as of March 31, 2023.
Minister Karad shared the numbers in response to an unstarred question by MP Gnanthiraviam S and MP Vijaykumar alias Vijay Vasanth. The MPs queried about the “measures taken by the Union government to recover the bad loans and NPA amount from corporate companies owing debts to the tune of Rs 1000 crore or more.”
Furthermore, the MPs inquired about the total outstanding loan from such consumers, as well as the total loan amount recovered over the last nine years, as well as the efforts undertaken to recover bad loans and reduce NPA.
“Comprehensive measures have been taken by the Government and RBI to recover and to reduce NPAs, including those pertaining to corporate companies, which has enabled an aggregate recovery of Rs. 10,16,617 crore (RBI provisional data for FY 2022-23) by SCBs during the last nine financial years,” the written reply stated.
Measures taken by the Union government to recover and reduce NPAs
Minister Karad further listed the measures taken b the government to recover and reduce Non-Performing Assets.
- The Insolvency and Bankruptcy Code, 2016 (IBC) substantially changed the creditor-borrower relationship, stripping control of the defaulting company away from promoters/owners, and banning wilful defaulters from the resolution process.
- Minister Bhagwat Karad further explained that the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, has been amended in order to render it more effective and that public sector banks have established Stressed Asset Management Verticals for “stringent recovery, segregated pre- and post-sanction follow-up roles for clean and effective monitoring, and engaged specialised monitoring agencies for large-value accounts.”
- “Under the PSB Reforms Agenda, comprehensive and automated Early Warning Systems (EWS) were instituted in PSBs, with 80 EWS triggers and the use of third-party data for time-bound remedial actions in borrowing accounts,” Karad stated.
- In addition to the measures undertaken by PSBs, wilful defaulters are not sanctioned with any additional amenities by banks or financial institutions, and their unit is restricted from launching new ventures for five years.
- Furthermore, wilful defaulters and companies with wilful defaulters as promoters/directors have been forbidden from raising funds in capital markets. The RBI established the Prudential Framework for Resolution of Stressed Assets in 2019 to provide a framework for early recognition, reporting, and time-bound resolution of stressed assets, with a built-in incentive for lenders to implement a resolution plan early.
2,438 borrowers with an outstanding sum of Rs 2.66 lakh crore: Central government tells Rajya Sabha
It is notable that the Central government told the Rajya Sabha on Tuesday (July 25) that there were about 2,438 borrowers with an outstanding sum of Rs 2.66 lakh crore who defaulted, with an outstanding amount larger than Rs 20 crore, up till March 2023.
According to Minister of State for Finance Bhagwat Karad, the Directorate of Enforcement has registered 490 bank fraud cases involving NPAs of Rs 20 crore or more in the last five years under the relevant provisions of the Prevention of Money Laundering Act, 2002 (PMLA). Additionally, assets worth Rs 15,113.02 crore were seized and returned to public sector banks.
