Lok Sabha Question No. 645 (UNSTARRED), answered on 2018-07-20
Subject: NPAs of Corporate House
Ministry: FINANCE
Asked by: PARAYAMPARANBIL KUTTAPPAN BIJU

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

LOK SABHA UNSTARRED  QUESTION  NO: 645 TO BE ANSWERED  ON THE 20th JULY,  2018/ASHADHA  29, 1940 (SAKA)

## QUESTION NPAs OF CORPORATE  HOUSE

## 645:  DR.  P. K. BIJU:

Will  the Minister  of FINANCE  be pleased to state:

- a) whether   the  non-repayment   of  loans  by   some  of  the  country's   biggest corporate   houses  is  the  major factor   for  the  huge  accumulation   of  NonPerforming  Assets (NPAs);
- c) the measures  adopted  to recover  the loans?
- b) if so, the details  of non-repaid  loans,  corporate  house-wise;  and

## ANSWER To be answered by

## THE MINISTER OF  STATE  IN THE  MINISTRY OF  FINANCE (SHRI SHIV PRATAP  SHUKLA)

(a) and (b): As per Reserve  Bank of India (RBI) data on global  operations,  as on 31.3.2018, the aggregate  amount  of gross NPAs  of Scheduled  Commercial  Banks (SCBs) was Rs. 10,35,528  crore,  out of which  the aggregate  amount  of gross NPAs of top 100 NPAs,  as reported  by  SCBs, w as Rs. 4,98,790 crore.

As regards  corporate  house-wise  details  of loans,  RBI has informed  that  under  the provisions   of  section   45E  of  the  Reserve   Bank   of  India  Act,   1934,  RBI  is prohibited   from disclosing   credit   information. Section   45E  provides   that   credit information   submitted   by   a  bank   shall   be  treated   as  confidential   and  not  to  be published  or otherwise  disclosed.

- (c): A number  of steps have been taken  for recovering  value  from NPA  accounts.

The Insolvency  and Bankruptcy  Code  (IBC) has been enacted to create a unified framework for resolving insolvency and bankruptcy matters. The Banking Regulation  Act,   1949 has been amended,  to provide  for authorisation to  RBI  to issue directions  to banks  to initiate  the insolvency  resolution  process under IBC.

Under  this,  by  adopting  a creditor-in-saddle  approach,  with  the interim  resolution professional  taking  over management  of affairs of corporate  debtor  at the outset, the  incentive   to  resort to  abuse of  the  legal   system has  been  taken   away.   This coupled   with   debarment   of  wilful   defaulters   and  persons   associated   with   NPA accounts   from the  resolution   process,   has  affected  a  fundamental   change   in  the creditor-debtor  relationship. Further,  as per RBI's directions,  cases have been filed under IBC in the National  Company  Law  Tribunal  (NCLT)  in respect of 39 large defaulters,  amounting  to about  Rs. 2.69 lakh  crore  funded exposure.  In addition, recapitalisation of PSBs, announced  and initiated  by  the Government,  has enabled upfront  provisioning, easing apprehensions  in actively  pursuing  resolution.  As per data reported  by  PSBs in May  2018, 1,402 cases pertaining  to stressed accounts  of PSBs, amounting  to Rs. 3,44,062 crore,  have been admitted  in NCLT.  Several  of these are at an advanced  stage, including  accounts  of high  value.  Recovery  in these has begun,  with  reported  deduction  in NPAs  of PSBs of Rs. 34,463 crore  in the first   large-value   account.   Through   these  steps,  a  clean   and  effective   system has been put in place.

Further, the Securitisation and Reconstruction of Financial Assets and Enforcement  of Security  Interest Act,  2002 (SARFAESI  Act) has been amended for  faster  recovery   with   a  provision   for  three   months   imprisonment in  case  the borrower   does  not  provide   asset  details   and  for  the  lender   to  get  possession  of mortgaged  property  within  30 days.  Also, six new  Debts Recovery  Tribunal  have been established  to expedite  recovery.

In  addition   to  the  above  changes  in  the  financial   ecosystem,   reforms   have  been initiated  in public  sector  banks  under the PSB reforms  Agenda  announced  by  the Government  this January.  These will  help avoid  recurrence  of a situation  of high NPAs  and  enable   resolution/recovery in  respect   of  NPA   accounts,   PSBs  have committed  to ensure  at least 10% share in consortium  lending,  ring-fencing  of cash flows, strict enforcement of conditions of sanction, engaging specialised monitoring  agencies for loans above Rs. 250 crore  for clean post-sanction  follow up,  ensure   strict   role   segregation   and  setting   up of  Stressed  Asset  Management Verticals  for stringent  recovery.

In addition,  under the PSBs Reforms  Agenda,  PSBs have created  Stressed Asset Management   verticals   for  stringent   recovery,   segregated   pre-  and  post-sanction follow-up  roles for clean and effective monitoring, initiated  creation  of online  onetime  settlement   platforms   and  committed   to  monitoring large-value   accounts through  specialised  monitoring agencies.