Lok Sabha Question No. 199 (UNSTARRED), answered on 2019-06-24
Subject: Public Sector Banks
Ministry: FINANCE
Asked by: Rodmal Nagar, P.P. Chaudhary, Devji Mansingram Patel

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

## LOK SABHA UNSTARRED QUESTION NO. †199

## TO BE ANSWERED ON THE 24 TH  JUNE 2019/ ASHADHA  3, 1941  (SAKA)

## Public Sector Banks

## †199.  SHRI RODMAL  NAGAR: SHRI P.P. CHAUDHARY: SHRI DEVJI M. PATEL:

Will  the Minister  of FINANCE  be pleased to state:

- (a) whether  any  new  steps are being  taken  by  the Government  to improve  the condition  of the public  sector  banks;
- (b) if so, the number  of banks  to which  funds have been provided  by  the Government  for undertaking  urgent  corrective  action  along  with  the bank-wise  details  of the total  amount  of the said funds  provided  during  the last five years;  and
- (c) the  details   of  the  positive   impact   of  the  said  funds  on  the  balance   sheet  and  nonperforming  assets of the said banks?

## ANSWER

## The Finance Minister (SHRIMATI NIRMALA  SITHARAMAN)

(a) to (c): To strengthen  the Public  Sector  Banks (PSBs), over the last four financial  years, Government   has  taken   comprehensive   steps  under its  4R's   strategy   of  recognising   NPAs transparently, resolving   and  recovering   value   from   stressed  accounts   through   clean   and effective  laws   and  processes,  recapitalising banks,   and  reforming   banks   through   the  PSB Reforms  Agenda.

Over the last five Financial  Years (FYs), PSBs have been recapitalised  to the extent  of Rs. 3.19 lakh  crore,  with  infusion  of Rs. 2.5 lakh  crore  by  the Government  and mobilisation of over  Rs.  66,000  crore   by   PSBs  themselves.   Details   of  capital   infused   in  PSBs  by   the Government  are at Annex.

Other  steps taken  by  the Government  to improve  the condition  of banks,  include, inter alia , the following:

- (i) Change   in  credit   culture   with   institution of  Insolvency   and  Bankruptcy Code   (IBC) fundamentally changing  the creditor-borrower relationship, taking  away  control  of the defaulting  company  from promoters/owners and debarring  wilful  defaulters  from  the resolution  process and debarring  them  from  raising  funds from  the market.
- (ii) Fugitive  Economic  Offenders  Act has been enacted  enabling  confiscation  of fugitive economic  offenders'  property.
- (iii)PSBs heads have been empowered  to request  for issuance  of look-out  circulars.
- (iv)National   Financial   Reporting   Authority has  been  established   as  an  independent Regulator  for enforcing  auditing  standards  and ensuring  audit  quality.
- (v) Key reforms  have been instituted  in PSBs, including  the following:
- (a) Board-approved Loan Policies of PSBs now  mandate tying up  necessary clearances/approvals  and linkages  before disbursement,  scrutiny  of group  balancesheet  and  ring-fencing   of  cash  flows,   non-fund   and  tail risk   appraisal   in  project financing.
- (b) Use  of  third-party data  sources  for  comprehensive   due  diligence   across  data sources has been instituted,  thus mitigating  risk  on account  of misrepresentation and fraud.
- (c) Monitoring  has been strictly  segregated  from  sanctioning  roles in high-value  loans, and  specialised   monitoring agencies   combining   financial   and  domain   knowledge have been deployed  for effective  monitoring of loans above Rs. 250 crore.
- (d) To ensure timely  and better  realisation  in one-time  settlements  (OTSs),  online  endto-end OTS platforms  have been set up.
- (e) For faster processing  of loan  proposals,  Loan Management  Systems  (LMS) have been put in place for personal  segment  and MSME loans.
- (vi) To  strengthen   governance   at  the  Board  level,   the  position   of  Chairman and Managing  Director  has been bifurcated  into  a non-executive  Chairman  and an MD & CEO.
- (vii) A professional  Banks Board Bureau  has been created  for arm's  length  selection  of non-executive  Chairmen  and whole-time  directors  (WTDs).

Positive  impact  on PSBs of Government's  4R's approach  is now  visible  and includes, interalia¸ the following:

- (i) Robust   recovery   of  Rs.  3.59  lakh   crores   over   the  last  four   years,   including   record recovery  of Rs 1.23 lakh  crores  in FY 2018-19, has been effected.
- (ii) Assets quality  has improved  as reflected  in 45% year-on-year  reduction  in slippage  into NPAs in  FY  2018-19,  and  63%  reduction   in  31  to  90  days   overdue   (SMA-1  &  2) corporate  accounts  by  March 2019  from  their  peak  in June 2017.
- (iii)With stress recognition largely completed,   significant   headway   in  recovery   and resolution  under  IBC, and reduced  slippages  as a result  of improved  underwriting and monitoring,  gross NPAs  of PSBs have started  declining,  after peaking  in March  2018, registering  a decline  of Rs. 89,189 crore,  from  Rs. 8.96 lakh  crore  in March  2018 to Rs 8.06 lakh  crore  in March 2019.
- (iv)With  substantial  cleaning  up accompanied  by  capitalisation of banks,  the overall  credit growth  of PSBs has picked  up substantially, from 0.78 % in FY 2016-17 to 7.51% in FY 2018-19.

By  addressing   the  underlying causes  behind   the  build-up   of  stress  in  PSBs  through comprehensive  reform  to change credit  culture  and tighten  discipline  for every  stakeholder  in the  financial   system,   institutionalising robust  underwriting and  monitoring,   governance reforms,  and leveraging  the transformation potential  of technology, the risk  of recurrence  of excessive stress in PSBs has been minimised  and PSBs have emerged  stronger.

Note: In the reply, the figures for PSBs include those for IDBI Bank Limited, which has been recategorised by RBI as a private sector bank with effect from 21.1.2019.

## Lok Sabha Unstarred  Question  no. †199  for  answer on 24.6.2019,  regarding 'Public Sector Banks'

## Capital infused in Public Sector Banks (PSBs) by Government

|   S. No | Bank                       | Total   |
|---------|----------------------------|---------|
|       1 | AllahabadBank              | 14,984  |
|       2 | AndhraBank                 | 8,763   |
|       3 | Bank ofBaroda              | 13,463  |
|       4 | Bank ofIndia               | 30,399  |
|       5 | Bank ofMaharashtra         | 8,570   |
|       6 | CanaraBank                 | 7,127   |
|       7 | CentralBankof India        | 13,682  |
|       8 | Corporation Bank           | 15,193  |
|       9 | DenaBank                   | 4,638   |
|      10 | Indianbank                 | 280     |
|      11 | IndianOverseasBank         | 15,317  |
|      12 | OrientalBankof Commerce    | 10,557  |
|      13 | PunjabNationalBank         | 24,342  |
|      14 | Punjab&SindBank            | 785     |
|      15 | SyndicateBank              | 8,778   |
|      16 | UCOBank                    | 15,773  |
|      17 | UnionBankof India          | 10,257  |
|      18 | UnitedBank ofIndia         | 9,138   |
|      19 | VijayaBank                 | 1,497   |
|      20 | IDBI Bank                  | 16,600  |
|      21 | StateBank ofIndia          | 22,844  |
|      22 | StateBank ofBikaner&Jaipur | -       |
|      23 | StateBank ofPatiala        | -       |
|      24 | StateBank ofHyderabad      | -       |
|      25 | StateBank ofMysore         | -       |
|      26 | StateBank ofTravancore     | -       |
|      27 | BhartiyaMahilaBank         | -       |

## Amounts  in crore  Rupees

Note:  1. Associates  Banks  of SBI and Bhartiya  Mahila  Bank merged  with  SBI with  effect from 1.4.2017.

2. IDBI Bank Limited  has been recategorised  by  RBI as a private  sector bank  with  effect from 21.1.2019.