MINISTER OF STATE IN THE MINISTRY OF FINANCE
(a): According to Central Bureau of Investigation (CBI), it has registered 28 cases [Regular Case (RC) + Preliminary Enquiry (PE)] relating to involvement of higher officials (of the level of General Manager or equivalent and above) of Public Sector and Private Banks in financial frauds during the period from 2014 to 2018 (upto 30.06.2018).
(b):The MD & CEO and one Executive Director of Bank of Maharashtra were arrested by State Economic Offences Wing, Pune, Maharashtra in connection with loan related issues of M/S D S Kulkarni Developers Limited on June 20, 2018. Besides, an Ex MD & CEO of the bank and one Zonal Manager of the bank were also arrested in the instant case. The above Officers have since been released on bail. RBI has stated that the bank had declared the company and its four directors as wilful defaulters on 27.03.2018 and the account has been red-flagged as on 08.06.2018.
(c):Asset Quality Review (AQR) was carried out in 2015 for clean and fully provisioned bank balance-sheets revealed high incidence of Non-Performing Assets (NPAs). Expected losses on stressed loans, not provided for earlier under flexibility given to restructured loans, were reclassified as NPAs and provided for. Public Sector Banks (PSBs) initiated cleaning up by recognisingNPAs and provided for expected losses. Primarily as a result of AQR and subsequent transparent recognition, the gross NPAs of PSBs increased by Rs. 6,16,586 crore between March 2015 and March 2018 (provisional data), as per RBI data.
(d): The year wise details of accused persons involved in Banks Frauds who have fled from India as provided by CBI, is Annexed.
(e): The measures taken by the Government for improvement of banking sector in the country, are as follows:
(i) For deterring economic offenders from evading the process of Indian law by remaining outside Indian jurisdiction, Government has introduced the Fugitive Economic Offenders Bill, 2018 to provide for attachment and confiscation fugitive economic offender’s property and has advised PSBs to obtain certified copy of the passport of the promoters/directors and other authorised signatories of companies availing loan facilities of more than Rs. 50 crore.
(ii) For enforcement of auditing standards and ensuring the quality of audits, Government has initiated establishment of National Financial Reporting Authority as an independent regulator.
(iii) To put in place a transparent resolution mechanism, the IBC has been enacted, which has redefined the debtor-creditor relationship. To enable timebound resolution, RBI has been authorised under law to direct banks to refer cases to NCLT for resolution under IBC, and RBI has mandated reference of a number of high-value stressed assets to NCLT.
(iv) To send a clear message that borrowers cannot wilfully default and continue to enjoy ownership of their assets, wilful defaulters and connected persons have been debarred from participating in the resolution process under the Insolvency and Bankruptcy Code (IBC).
(v) Launch of Central Fraud Registry (CFR), a web based searchable database of frauds reported by the banks, containing data for the last 13 years has been made operational by RBI in January, 2016.
(vi) To squarely address the issue of NPAs, stressed assets of banks have been transparently and realistically recognised as NPAs.
(vii) The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act has been amended to make it more effective. Further, six new Debts Recovery Tribunals have been established to expedite recovery.
(viii) To ensure prudential lending, better customer service, enhanced credit availability and better governance, a comprehensive PSB Reforms Agenda has been approved by bank Boards.
PSBs have, inter-alia, committed to create Stressed Asset Management verticals for stringent recovery and ensure clean and effective post-sanction follow-up for large credit exposures through specialized monitoring agencies.
(ix) The extant regulatory framework, inter-alia, also provides as follows:
a. RBI has issued a revised framework for resolution of stressed assets, which provides for time-bound resolution of high-value stressed accounts.
b. Banks have been advised to establish Recovery Cells, fixing of recovery targets and close monitoring of recovery performance.
c. The Board of Directors of the bank were advised to review slippages in asset classification in the borrowal accounts with outstanding Rs.5 crore and above and to review top 100 borrowal accounts of below Rs.5 crore in each category of NPA.
d. Banks were advised to put in place robust mechanism for early detection of signs of distress and to use such early warning signal to put in place an effective preventive asset quality management framework, including a transparent restructuring mechanism in case of viable accounts for preserving the economic value of such accounts.
(x) RBI has set up the Central Repository of Information on Large Credits (CRILC) to collect, store and disseminate credit data to lenders. CRILC’s main objective is two-fold – (i) early recognition of asset quality problems by reducing information asymmetry and (ii) to help banks to take informed credit decisions.
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