Concrete steps by the government and the RBI helped banks recover over Rs 8.6 lakh crore worth of bad loans over the past eight financial years, the government told parliament on Monday.
Finance Minister Bhagwat Karad, in a written response to the Lok Sabha, said the occurrence of non-performing assets (NPAs) is normal, albeit an undesirable accompaniment to banking.
Several factors — including prevailing macroeconomic conditions, sectoral issues, the global business environment, banks’ delayed recognition of stress, aggressive lending during the upturn, inappropriate risk assessment and poor lending — are attributed to NPA build-up, he said.
“The government and the RBI (Reserve Bank of India) regularly issue guidelines and have taken several initiatives aimed at the liquidation of long-standing stressed assets on banks’ books and the timely identification and detection of stress immediately after a failure and taking corrective actions aimed at mitigating them,” Karad said.
These measures complement legislation already available to lenders for recovery and resolution, including the Debt Recovery and Bankruptcy Act of 1993, the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interests Act of 2002 and the Insolvency and Bankruptcy Law 2016 (IBC), the minister said.
“As a result of comprehensive steps taken by the Government and RBI to review the cases of NPAs and bring them down, Scheduled Commercial Banks (SCBs) have earned Rs 8,60,369 crore (preliminary data) over the past eight financial years. recovered from NPAs. ‘ Karad said.
He said a change in lending culture had been brought about with the IBC and under it 480 cases of resolution plans had been approved by March 2022, with an amount of Rs. 2.34 crore to be sold by financial creditors.
Also, the Central Repository of Information on Large Credits (CRILC) has been set up by the RBI to collect, store and share credit data with lenders and banks are required to submit weekly reports to CRILC in the event of a default on credit institutions with an exposure of Rs 5 crore and more, he added.
Among other things, willful debtors and companies with willful debtors as promoters/directors have been denied access to the capital markets to raise funds and the jurisdiction of the Debt Recovery Tribunal (DRTs) has been increased from Rs 10 lakh to Rs 20 lakh to allow the DRTs themselves to focus on high value cases, resulting in higher recoveries for the banks and financial institutions. Also, six new DRTs were set up to speed up recovery.
Karad said all credit institutions have been mandated by the RBI to become members of all credit information companies (CICs) and to submit credit information, including historical data, related to borrowers to CICs, and to regularly update and share the data with other credit institutions.
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