Lok Sabha Question No. 3510 (UNSTARRED), answered on 2018-03-16
Subject: One Time Settlement for NPAs
Ministry: FINANCE
Asked by: RAVINDRA KUMAR RAY, SHER SINGH GHUBAYA

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

TO BE ANSWERED  ON THE 16 th  MARCH, 2018/PHALGUNA 25, 1939 (SAKA)

UNSTARRED  QUESTION  NO: 3510

## QUESTION ONE TIME SETTLEMENT OF NPAs

## 3510:  DR.  RAVINDRA  KUMAR  RAY: SHRI SHER SINGH GHUBAYA:

Will  the Minister  of FINANCE  be pleased to state:

- a) whether  the Government  banks  has launched  One Time  Settlement  scheme to deal with  the problem  of Non-Performing  Assets (NPAs);
- c) the other  steps being  taken/likely to  be taken  by  the Government  to help the banks  to deal with  the problem  of NPAs?

## ANSWER

- b) if so, the details  thereof;  and

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

- (a)  and  (b):  As  per  instructions of  Reserve   Bank of  India  (RBI),  banks   are required   to  have  a loan   recovery policy,  which  may  cover, inter alia, negotiated  settlements  of NPAs.  As per inputs  received  from Public  Sector Banks (PSBs), all PSBs have One Time Settlement  (OTS) schemes. These OTS schemes are in pursuance of Board-approved  policies  of banks,  and are typically oriented  towards  sectors such as agriculture, Micro  Small and Medium  Enterprises  (MSMEs), weaker  sections  and education  loans,  and typically have an upper  limit  on the amount  of NPA.

Recovery  of loans was being  effected under  the provisions  of the Securitisation  and Reconstruction of Financial Assets  and  Enforcement   of  Security   Interest (SARFAESI)   Act  and  through   Debts  Recovery   Tribunals. SARFAESI  Act was amended  in 2016 to make it more effective.  Further,  six new  Debts Recovery  Tribunals have been established  to expedite  recovery.

- (c):   Insolvency   and  Bankruptcy Code,   2016 has been  enacted   for  time-bound   resolution   of  stressed  assets. Further,  the  Banking   Regulation   Act,   1949 has been  amended   last  year   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,  RBI has issued directions  to certain  banks  for referring 12 accounts,  with  outstanding  amounts greater  than  Rs. 5,000 crore  and with  60% or more classified  as nonperforming  as of 31.3.2016,  to initiate  insolvency  process under  the Code.  In accordance  with  these directions, banks have filed applications  in respect of these accounts  before the National  Company  Law  Tribunal . Further, keeping   in  view   the  enactment   of  the  Code,   RBI has recently   issued  a  revised   framework for  resolution   of stressed assets,  which   provides   for  time-bound   resolution   of  high-value   stressed  accounts,   requiring   filing   of insolvency  application  under the  Code  in case of non-implementation of Resolution  Plan  within  180 days.

In addition,  under the Public  Sector  Banks (PSBs) Reforms  Agenda  announced  by  the Government  in January 2018, PSBs  have  committed, inter-alia, to  ensure for  clean  lending,   strict   segregation   of  roles   for  appraisal, monitoring   and  recovery,   online   processing   of  loans,   clean   consortium   lending   arrangements, Stressed  Asset Management  verticals  for stringent  recovery,  and clean  post-sanction  follow-up  for loans  above Rs. 250 crore.