Lok Sabha Question No. 1347 (UNSTARRED), answered on 2018-02-09
Subject: Bad Loan of India
Ministry: FINANCE
Asked by: DHARMENDRA YADAV, SHIVAJI ADHALRAO PATIL, PRITAM GOPINATH MUNDE, Shrirang Appa Barne, ANANDRAO  ADSUL

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

## LOK SABHA UNSTARRED QUESTION NO: 1347

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

QUESTION

## BAD LOAN OF INDIA

1347:

SHRI DHARMENDRA  YADAV: DR. PRITAM GOPINATH  MUNDE: SHRI ANANDRAO  ADSUL:

SHRI ADHALRAO  PATIL SHIVAJIRAO: SHRI SHRIRANG  APPA  BARNE:

Will  the Minister  of FINANCE  be pleased to state:

- a) whether   the  Non-Performing   Assets  (NPAs)   accumulated   by   Indian   lenders   are  higher than those of banks  in most major  economies  including  the US,  UK, China  and Japan  and if so, the details  thereof  and the rank  of India among  the major  world  economies  plagued by such bad loans;
- c) whether  the Government  and the Reserve  Bank of India (RBI) are readying  a strategy  to deal with  the bad loan  problem  and if so, the details  thereof  along  with  the plan  prepared by the Government  in this regard;
- b) whether  gross NPAs  increased  to 10.2 percent  in September,  2017 compared  to 9.6 percent in March,  which  has cautioned  against  further  deterioration as gross NPAs  could inch  up to 10.8 percent  by  March,  2018 and  if so, the facts thereof;
- d) whether  any  comprehensive  strategy  has been chalked  out by  the Government  to nab the defaulters  and if so, the details  thereof;  and
- e) whether   the  report   from   banks   post  completion   of  forensic   audit   on  big  defaulters   has been received  by  the Government  and if so, the details  thereof  and the time  by  which  the action  against  the defaulters  will  be initiated?

## ANSWER To be answered by THE MINISTER  OF STATE  IN THE  MINISTRY  OF FINANCE (SHIV PRATAP  SHUKLA)

- (a)  Reserve   Bank   of  India  (RBI)  has  informed  that   from   country-wise data  on  ratio   of  nonperforming  loans to total  gross loans available  on the International Monetary  Fund database,  it is  observed   that   the  ratio   for  India  compares   adversely   with   those  of  USA,   UK,   China   and Japan.
- (b) As  per  Financial   Stability Report   (FSR)  released   by   Reserve   Bank of  India  (RBI)  in December  2017, the gross NPAs  (GNPAs)  of Scheduled  Commercial  Banks increased  to 10.2 percent   in  September   2017  compared   to  9.6  percent   in  March 2017.  Further,   as  per  FSR,

macro stress test for credit  risk  indicates  that  under the baseline  scenario,  the GNPA  ratio  of the banking  sector may  increase  to 10.8 per  cent by  March 2018.

- (c) and (d): The problem  of NPAs  of banks  has been addressed holistically through  transparent and realistic recognition of NPAs, provision for expected losses and unprecedented recapitalisation, and putting  in place a clean  recovery  system.

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.  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.

Asset  Quality   Review   initiated   by   Reserve   Bank   of  India  (RBI)  in  2015,  and  subsequent transparent   recognition   by   banks   revealed   high   Non-PerformingAssets (NPAs),   which   have impacted  balance-sheets  of several  Public  Sector  Banks  (PSBs).

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.

- (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.