Lok Sabha Question No. 1181 (UNSTARRED), answered on 2018-02-09
Subject: Loan Defaulters
Ministry: FINANCE
Asked by: SHRIKANT EKNATH SHINDE, VINAYAK BHAURAO RAUT

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

## LOK SABHA UNSTARRED QUESTION NO: 1181

TO BE ANSWERED  ON THE 9 TH  FEBRUARY,  2018/MAGHA  20, 1939 (SAKA)

## QUESTION LOAN DEFAULTERS

## 1181:   DR. SHRIKANT  EKNATH SHINDE: SHRI  VINAYAK  BHAURAO  RAUT:

Will  the Minister  of FINANCE  be pleased to state:

- a) whether  the bad loans have weakened  the balance  sheet of major  public  sector banks,  if so, the details  thereof;
- c) whether  any  comprehensive  strategy  has been chalked  out by  the Government to nab the defaulters,  if so, the details  thereof;
- b) whether  the Government  and RBI are formulating  a strategy  to deal with  the bad  loan  problem,   including   a  one-time   settlement   scheme  for  weak   sectors and penal action  against  siphoning  of funds, if so, the details  thereof  and the plan prepared  by  the Government  in this regard;
- d) whether   the  report   from  banks   post  completion   of  forensic   audit   on  big defaulters  has been received  by  the Government,  if so, the details  thereof  and the time  by  which  the action  against  the defaulters  will  be initiated;  and
- e) the corrective/preventive measures  prepared  by  the Government  to check  such type  frauds in future?

## ANSWER

## (SHIV PRATAP  SHUKLA)

## To be answered by THE MINISTER  OF STATE  IN THE  MINISTRY OF  FINANCE

(a) to (c): Asset Quality Review  initiated  by  Reserve  Bank of India (RBI) in 2015, and  subsequent   transparent   recognition   by   banks   revealed   high   Non-Performing Assets (NPAs),  which  have impacted  balance-sheets  of several  Public  Sector  Banks (PSBs). The gross NPAs  of PSBs, as on 30.9.2017, were   Rs. 7,33,974 crore. For  strengthening   PSB  balance-sheets,   under Indradhanush   plan,   Government provided   for  Rs.  70,000 crore   till   FY  2018-19,  as  a  result of  which   despite   high

NPA  and  consequential   provisioning, banks   were   successful in  complying with capital   adequacy   norms.   Between   2014-15  and  the  first   quarter   of  FY  2017-18, provision   of  Rs.  3,79,080   crore   was made  to  deal  with   expected   losses.  Further, with   the  object   of  increasing   credit   off-take  and  promoting   creation   of  jobs,  in October  2017 Government  announced,  and has since initiated,  recapitalisation of Public  Sector  Banks by  Rs. 2,11,000  crore  within  two  financial  years  to make  banks weakened  by  NPAs  strong.

Further, to enable  effective action in respect of defaulters,   Insolvency   and Bankruptcy  Code,  2016 was enacted,  which  provides  for timebound  resolution  of stressed  assets.  Cases  have  been  instituted   under  the  Code   in  the  National Company  Law Tribunal  (NCLT)  in respect of the 12 largest  defaulters,  amounting to  about   25%  of  the  NPAs   of  the  entire   banking   system.   To safeguard against misuse  of  the  legal   process,   wilful   defaulters   and  persons   associated   with   NPA accounts  have been barred from participating in the process under way  in NCLT. (d) and (e): As per RBI's Master  Directions  on Frauds,  banks  undertake  forensic audit  and take  action  upon  forensic  audit  reports . These Directions  do not envisage submission  of such reports  to and action  thereon  by  the Government.