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Parliamentary panel tells Govt to take urgent steps to contain NPAs



New Delhi : Concerned over the rising NPAs of banks, a Parliamentary panel has asked the government to take urgent remedial measures to reduce the volume of stressed assets in the system and strengthen the vigilance mechanism.

The Committee on Petition in its report said that it is constrained to note that even after having a ‘vigilance mechanism’ in vogue in the banking system, there were incidences of fraud relating to non-performing assets (NPAs). “In this regard, the Committee opined that merely issuing of guidelines or advisories by the government or the RBI for averting the incidences of fraud relating to NPAs do not seem to have yielded the desired results and the RBI-being a Regulator – does not seem to have succeeded in so far as implementation and enforcement of its own guidelines is concerned,” it said.

The Committee, therefore, recommended that the government impress upon the Reserve Bank of India (RBI) to monitor and follow-up strict compliance of relevant instructions with the banks and financial institutions on a regular basis, the panel added.


  It also recommended that the existing vigilance mechanism be re-visited and, if required, the same be amended to provide more teeth to it. The committee has also made a case for amending banking laws, including the SBI Act, to provide for disclosure of names of loan defaulters. The panel recommended that the government make appropriate amendments in “the archaic provisions of the SBI Act and other relevant laws to disclose the names of individuals — who owe money to the Banks or are responsible for bad loans on account of their default to repay”.

  In this regard, it said the Committee appreciated that the RBI was in favour of making available information on ‘wilful defaulters’ in the public domain. However, it added that the Ministry of Finance (Department of Financial Services)/RBI are of the opinion that the disclosure of information of other defaulting borrowers may not be in the interest of the revival of their distressed business units, which may be otherwise viable. It reiterated that they should undertake an “objective examination and analysis of the extant provision(s) for disclosure of details of loan defaulters in the public domain by amending the existing relevant Acts/Rules vis-a-vis the interest of the revival of their distressed business units without having any impact on their viability”.

PSB NPAs

The bad loans of public sector banks (PSBs) stood at Rs 7.34 lakh crore at the end of the second-quarter of the ongoing fiscal, a bulk of which came from corporate defaulters, according to RBI data. However, on the other hand private sector banks’ non- performing assets (NPAs) were considerably low at Rs 1.03 lakh crore by September 30.

“The gross non-performing assets of public sector and private sector banks as on September 30, 2017 were Rs 7,33,974 crore, Rs 1,02,808 crore, respectively,” the finance ministry said citing RBI data. The government said leading corporate houses and companies accounted for approximately 77 per cent of the total gross NPAs from domestic operations for the banks.

Among the major public sector banks, the State Bank of India (SBI) had the highest amount of NPAs at over Rs 1.86 lakh crore followed by the Punjab National Bank (Rs 57,630 crore), the Bank of India (Rs 49,307 crore), the Bank of Baroda (Rs 46,307 crore), Canara Bank (Rs 39,164 crore) and the Union Bank of India (Rs 38,286 crore).

Among the private sector lenders, ICICI Bank had the highest amount of NPAs on its books at Rs 44,237 crore by the end of September, followed by Axis Bank (Rs 22,136 crore), HDFC Bank (Rs 7,644 crore) and the  Jammu and Kashmir Bank (Rs 5,983 crore). A host of provisions have been restored for the recovery of the bad loans, the Ministry said, adding that the network of Debt Recovery Tribunals (DRTs) have been expanded. There are 39 DRTs in operation now, as compared to 33 in 2016-17, which will help reduce pending cases as well as expedite disposal of cases.




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