THE MINISTER OF STATE IN THE MINISTRY OF FINANCE
(a) to (e): As per Reserve Bank of India (RBI) data on global operations, aggregate gross advances of nationalised banks increased from Rs. 11,33,137 crore as on 31.3.2008 to Rs. 34,03,717 crore as on 31.3.2014. As per RBI inputs, the primary reasons for the spurt in stressed assets have been observed to be, inter-alia, aggressive lending practices, wilful default, loan frauds, employee misconduct / corruption in some cases, and economic slowdown. Asset Quality Review (AQR) initiated in 2015 for clean and fully provisioned bank balance-sheets revealed high incidence of non-performing assets (NPAs). As a result of AQR initiated in 2015 and subsequent transparent recognition by banks, stressed accounts were reclassified as NPAs and expected losses on stressed loans, not provided for earlier under flexibility given to restructured loans, were provided for. Further, all such schemes for restructuring stressed loans were withdrawn. Primarily as a result of transparent recognition of stressed assets as NPAs, gross NPAs of nationalised banks, as per data of RBI on global operations, rose from Rs. 1,92,809 crore as on 31.3.2015, to Rs. 6,16,586 crore as on 31.3.2018, and as a result of Government’s strategy of recognition, resolution, recapitalisation and reforms, have since declined (as per declared results of nationalised banks) to Rs. 5,56,991 crore as on 31.12.2019. With regard to NPAs of nationalised banks as on 29.2.2020, RBI has informed that data on NPAs are submitted by banks at quarterly intervals. Bank-wise details of gross NPAs of nationalised banks are at Annex.
Government has implemented a comprehensive strategy, consisting of recognition of NPAs transparently, resolution and recovery of value from stressed accounts, recapitalisation of nationalised banks, and reforms in nationalised banks and the wider financial ecosystem for a responsible and clean system. Comprehensive steps have been taken under the Government strategy to curb NPAs of nationalised banks, including, inter-alia, the following:
(1) Change in credit culture has been effected, with the Insolvency and Bankruptcy Code (IBC) fundamentally changing the creditor-borrower relationship, taking away control of the defaulting company from promoters/owners and debarring wilful defaulters from the resolution process and debarring them from raising funds from the market.
(2) The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 has been amended to make it more effective, with provision for three months’ imprisonment in case the borrower does not provide asset details, and for the lender to get possession of mortgaged property within 30 days.
(3) Suits for recovery of dues are also filed by banks before Debts Recovery Tribunals (DRTs). Six new DRTs have been established to expedite recovery.
(4) Over the last five financial years and the current financial year, nationalised banks have been recapitalised to the extent of Rs. 3.18 lakh crore, with infusion of Rs. 2.78 lakh crore by the Government and mobilisation of over Rs. 0.40 lakh crore by nationalised banks themselves, enabling nationalised banks to pursue timely resolution of NPAs.
(5) Key reforms have been instituted in nationalised banks as part of the Public Sector Banks Reforms Agenda, including the following:
(i) Board-approved loan policies of nationalised banks now mandate tying up necessary clearances/approvals and linkages before disbursement, scrutiny of group balance-sheet and ring-fencing of cash flows, non-fund and tail risk appraisal in project financing.
(ii) Use of third-party data sources for comprehensive due diligence across data sources has been instituted, thus mitigating risk on account of misrepresentation and fraud.
(iii) Monitoring has been strictly segregated from sanctioning roles in high-value loans, and specialised monitoring agencies combining financial and domain knowledge have been deployed for effective monitoring of loans above Rs. 250 crore.
(iv) To ensure timely and better realisation in one-time settlements (OTSs), online end-to-end OTS platforms have been set up.
Enabled by the above steps, as per data of RBI on global operations, the gross NPAs of nationalised banks, after reaching a peak of Rs. 6,16,586 crore as on 31.3.2018, declined (as per declared results of nationalised banks) to Rs. 5,56,991 crore as on 31.12.2019. Further, nationalised banks have effected recovery of Rs. 3,08,370 crore over the last five financial years and the first three quarters of the current financial year, including record recovery of Rs. 86,014 crore during the financial year 2018-19.
Comprehensive steps taken to check bank frauds have resulted in the amount involved in frauds of Rs. 1 lakh and above, reported by nationalised banks based on occurrence, declining sharply from Rs. 12,411 crore in FY2017-18, to Rs. 11,120 crore in FY2018-19 and to Rs. 3,739 crore in the first three quarters of the FY2019-20.
The steps taken to curb bank frauds include, inter-alia, the following—
(1) An online searchable database of frauds reported by banks, in the form of Central Fraud Registry, has been set up to enable timely identification, control and mitigation of fraud risk and carrying out due diligence during the credit sanction process.
(2) Fugitive Economic Offenders Act, 2018 has been enacted to provide for attachment of property of a fugitive economic offender, confiscation of such offender’s property and disentitlement of the offender from defending any civil claim.
(3) PSBs have been advised to—
(i) 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) decide on publishing photographs of wilful defaulters, in terms of the instructions of RBI and as per their Board-approved policy; and
(iii) strictly ensure rotational transfer of officials/employees.
(4) Heads of PSBs have been empowered to issue requests for issue of Look-Out Circulars.
(5) For enforcement of auditing standards and ensuring the quality of audits, Government has established the National Financial Reporting Authority as an independent regulator.
(6) In order to bring transparency and accountability in the larger financial system, bank accounts of 3.38 lakh inoperative companies have been frozen.
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Annex
Lok Sabha unstarred question no. 1645, regarding Bank NPAs
Details of gross NPAs of nationalised banks
Amounts in crore Rs.
Bank F.Y.
2014-15 F.Y.
2015-16 F.Y.
2016-17 F.Y.
2017-18 F.Y.
2018-19 F.Y.
2019-20
(till 31.12.2019)
Allahabad Bank 8,358 15,385 20,688 26,563 28,705 32,150
Andhra Bank 6,877 11,444 17,670 28,124 28,974 30,951
Bank of Baroda (BoB) 16,261 40,521 42,719 56,480 48,233 73,140
Dena Bank 4,393 8,560 12,619 16,361 12,768 Amalgamated into BoB
Vijaya Bank 2,443 6,027 6,382 7,526 8,923
Bank of India 22,807 49,879 52,045 62,328 60,661 61,730
Bank of Maharashtra 6,402 10,386 17,189 18,433 15,324 15,746
Canara Bank 13,040 31,638 34,202 47,468 39,224 36,645
Central Bank of India 11,873 22,721 27,251 38,131 32,356 33,259
Corporation Bank 7,107 14,544 17,045 22,213 20,724 19,557
Indian Bank 5,670 8,827 9,865 11,990 13,353 13,862
Indian Overseas Bank 14,922 30,049 35,098 38,180 33,398 23,734
Oriental Bank of Commerce 7,666 14,702 22,859 26,134 21,717 21,634
Punjab and Sind Bank 3,082 4,229 6,298 7,802 8,606 8,923
Punjab National Bank 25,695 55,818 55,370 86,620 78,473 76,809
Syndicate Bank 6,442 13,832 17,609 25,759 24,680 25,330
UCO Bank 10,186 20,908 22,541 30,550 29,888 22,140
Union Bank of India 13,031 24,171 33,712 49,370 48,729 49,924
United Bank of India 6,553 9,471 10,952 16,552 12,053 11,457
Source: RBI (for FY2014-15 to FY2018-19) and nationalised banks (for FY2019-20)
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