THE MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRIANANT.G.GEETE)
(a): Yes, Sir.
(b): The ne`NS article in the Indian Express dated 1:-1.7.200:2 mainly focused on the
issue of Non Performing Assets of Banks and Financial Institutions.
(c ): Government of India and RBI have advised thet bcmks and financial institutions to
take several steps for recovery of dUE!lii which include evolvingclnd implementation of
recovery policy, compromise settlement through Settlement Advisory Committees and filing
of suits in Debts. Recovery Tribunals (DRTs). On 21st JunE~, 2002, Government has promulgated
`The Securitisation and Rec()nstructic)n 01` Financial Assets and Enforcement of Securities
Interest Ordinance, 2002` to facilitate foreclosure and I:!nforcement of securities in cases
of default in banks and financial institutions tCI realize their dUies.
(d) & (e): Since RBI has dere~gulated the intere~~t rates on eldvances above RS.2 lakhs
with effect from 18th October 1994, the rate of interest on cidvances are determined by the
banks themselves. Banks hCilve also been advised on 19th October 1996 to announce maximum
spreads pver Prime Lending Ratl:~ (PLR) (being the minimum lending rate charged by banks in
respect of credit limits over RS.2 fakhs to the !)j3St borrow9rs). For credit limits upto
RS.2 lakh, banks have been asked to charge interest at the rate not exceeding PLR.
With effect from 22 October 199ir, Reserve Bank of India (I~BI) has given freedom to
commercial banks to fix their own interest rates on domestic: term deposits of various
maturities with prior approval of respective Board of Directors/Asset Liability
Management Committee (ALCO). However, banks cannot discriminate in the matter of
rate of interest paid on deposits, between one depositor and another. Exceptions
have been given in respect of deposits received from Senior Citizens, bulk deposits
of greater than RS.15.00 fiakl1 and bank`s staff members etc.
