THE MINISTER OF STATE IN THE MINISTRY OF FINANCE
(a): As per Reserve Bank of India (RBI) data on global operations, bank-wise Gross Non-performing Assets (GNPAs) of Public Sector Banks (PSBs) as on 31.3.2015, 31.3.2016, 31.3.2017 and 31.3.2018, are at Annexure.
(b): RBI has issued Prudential norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances, which provide for classification of loans as NPAs. For addressing the NPA issue, RBI has put in place several measures, prudential instructions and guidelines for enabling income recognition, consistent and objective identification of assets across the banks and provisioning there against. As per RBI instructions, Banks have established appropriate internal systems (including technology enabled processes) for proper and timely identification of NPAs. Banks undertake various types of audit such as Statutory Audit, Risk Based Internal Audit (RBIA), Concurrent audit, Information Systems (IS) audit and Special Audits to ensure, inter alia, regulatory compliance of the Prudential norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances. In addition, RBI’s inspection highlights any divergences in asset classification and provisioning as assessed by the RBI vis-à-vis audited financial statements of banks.
To recover value from NPAs of banks, the Insolvency and Bankruptcy Code, 2016 (IBC) has been enacted for time-bound resolution of stressed assets. Further, the Banking Regulation Act, 1949 has been amended to provide for authorisation by the Government to RBI, for issuing directions to banks to initiate the insolvency resolution process under the Code. Under the provisions of this amending legislation, as per RBI’s directions, cases have been filed under IBC in the National Company Law Tribunal (NCLT) in respect of 39 large defaulters, amounting to about Rs. 2.69 lakh crore funded exposure. 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.
To deter default on the part of wilful defaulters and thereby incentivise recovery, as per RBI’s instructions, wilful defaulters are not sanctioned any additional facilities by banks or financial institutions, their unit is debarred from floating new ventures for five years, and lenders may initiate criminal proceedings against them, wherever necessary. As per data reported by PSBs, as on 31.3.2018, 2,323 FIRs have been registered against wilful defaulters, 8,835 suits have been filed for recovery from them, and action has been initiated under the SARFAESI in respect of 7,300 cases of wilful defaulters. Further, SEBI Regulations have been amended to debar wilful defaulters and companies with wilful defaulters as promoters/directors from accessing capital markets to raise funds and IBC has been amended to debar wilful defaulters from participating in the insolvency resolution process.
(c): RBI has informed that as per the provisions of section 45E of the Reserve Bank of India Act, 1934, RBI is prohibited from disclosing credit information, which shall be treated as confidential and not be published or otherwise disclosed.
(d): Government has not set up any committee in this regard.
(e): As per RBI instructions, banks are required to have a loan recovery policy, which may cover, inter alia, negotiated settlements of NPAs. As per inputs received from PSBs, all PSBs have One Time Settlement (OTS) schemes, in pursuance of their Board-approved policies, which are typically oriented towards sectors such as agriculture, Micro Small and Medium Enterprises (MSMEs), weaker sections and education loans. As per PSB data for OTS/compromise in NPA accounts above Rs. 5 crore outstanding, Rs. 11,148 crore were recovered through OTS/compromise in FY 2017-18.
RBI’s Feb 2018 instructions regarding revised framework for resolution of stressed assets provides for a timebound resolution plan approved by the banks against the defaulting entities to initiate steps, including restructuring, to cure the defaults. The new framework for restructuring is not applicable to the micro, small and medium enterprises (MSMEs) with loans of Rs. 25 crore or less.
(f): Government and RBI have taken a number of measures to contain NPAs, as mentioned in the reply to part (b). In addition, under the PSB Reforms Agenda announced by the Government, PSBs have committed to clean and commercially prudent business through Stressed Asset Management Verticals for focussed recovery, rigorous due diligence and appraisal for sanction by scrutinising group balance sheets, at least 10% share in consortium lending, ring-fencing of cash flows, initiating use of technology and analytics for comprehensive due diligence across data sources, building capacity for techno-economic valuation, clean and effective post-sanction follow-up on large-value accounts by tying up with Agencies for Specialised Monitoring, and strict segregation of pre- and post-sanction roles for enhanced accountability. For enabling a clean credit system in future and 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 and to examine all NPA accounts exceeding Rs. 50 crore from the angle of possible fraud.
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