Lok Sabha Question No. 3810 (UNSTARRED), answered on 2017-03-24
Subject: Functioning of Banks
Ministry: FINANCE
Asked by: VINAYAK BHAURAO RAUT, PREM SINGH CHANDUMAJRA, SHIVAJI ADHALRAO PATIL, SHRIKANT EKNATH SHINDE, PRITAM GOPINATH MUNDE

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF FINANCIAL SERVICES

## LOK SABHA

## UNSTARRED QUESTION NO.3810

TO BE ANSWERED ON THE 24 th  March 2017/ Chaitra 3, 1939 (SAKA)

## Functioning of Banks

3810.  SHRI VINAYAK BHAURAO RAUT: SHRI ADHALRAO PATIL SHIVAJIRAO: DR. PRITAM GOPINATH MUNDE:

PROF. PREM SINGH CHANDUMAJRA: DR. SHRIKANT EKNATH SHINDE:

Will the Minister of FINANCE be pleased to state:

- (a) whether the Government has any proposals/plans for improving the functioning of Public Sector Banks (PSBs) and if so, the details thereof;
- (b) whether  the  PSBs  are  increasingly  getting  plagued  with  plethora  of  problems  due  to  Non  Performing Assets (NPAs), competition, skilled work force and technology and if so, the details thereof;
- (c) whether the Government proposes to improve the Debt Recovery Tribunals (DRTs) and to allow them to function effectively in this regard and if so, the details thereof;
- (d) whether DRTs are inadequate and ill-equipped to deal with loan defaulters and if so, the details thereof and the reasons therefor; and
- (e) the  steps  taken/being  taken  by  the  Government  to  set  up  more  DRTs  and  allowing  them  to  function effectively and strengthening them and improve functioning of the banks?

## ANSWER

## The Minister of State in the Ministry of Finance (SHRI SANTOSH KUMAR GANGWAR)

- (a): In August 2015, the Government formulated 'Indradhanush Plan' under which measures were introduced to improve operational and capital efficiency of Public Sector Banks (PSBs). Key Performance Indicators (KPIs) were  outlined  for  all  PSBs  and  cash  incentives  were  introduced  for  fulfillment  of  these  KPIs.  These  KPIs included  measures  such  as  efficiency  of  capital  usage,  diversification  of  business  processes  and  NPA management etc. Further, the government made available funds to the tune of Rs. 70,000 crore for infusion in PSBs till FY 19 to confirm with capital adequacy norms outlined under Basel III. The Government also allowed PSBs  to  raise  capital  through  Follow-on  Public  Offer  (FPO)  or  Qualified  Institutional  Placement  (QIP)  by diluting Government of India holding upto 52% in phased manner based on their capital requirement, their stock performance, liquidity, market conditions etc.
- (b):  Gross NPAs of Public Sector Banks (PSBs) have shown an increase during the recent years. NPAs have risen from 9.83% as on March 2016 to 12.23% as on December 2016 in respect of PSBs. The increase in NPAs is due to slowdown in recovery in the global economy and continuing uncertainty in the global markets leading to lower exports of various products like textiles, engineering goods, leather, gems etc.
- (c) to (e): A roadmap has been prepared by the Government for improvement in functioning of Debts Recovery Tribunals (DRTs). These include setting up e-DRT project, computerization, scanning and digitization of legacy records, creation of online DRT portal (www.drt.gov.in), providing IT infrastructure, adequate office space and other infrastructure. Further, to strengthen DRTs, the Recovery of Debts Due to Banks and Financial Institutions (RDDB & FI) Act, 1993 was amended in 2016 to rationalise the procedures and timelines followed by these Tribunals for expeditious adjudication and speedier resolution of defaulted loans in time bound manner.

In  order  to augment capability of DRTs, regular training programs are being conducted for Registrars, Assistant Registrars, Recovery Officers and other staff.

Six new DRTs have been established at Bengaluru, Chandigarh, Dehradun, Ernakulam, Hyderabad and Siliguri by the Government for speedier disposal of cases.

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