Lok Sabha Question No. 1753 (UNSTARRED), answered on 2018-07-27
Subject: Resolving NPAs of PSBs
Ministry: FINANCE
Asked by: KINJARAPU RAM MOHAN NAIDU

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

## LOK SABHA UNSTARRED  QUESTION  NO: 1753 TO BE ANSWERED  ON THE 27 th  JULY,  2018/SHRAVANA 05, 1940 (SAKA)

## QUESTION RESOLVING NPAs OF PSBs

## 1753:    SHRI  RAM  MOHAN  NAIDU  KINJARAPU:

Will  the Minister  of FINANCE  be pleased to state:

- (a) the details  of Non-Performing  Asset (NPA)  write-off  by  Public  Sector  Banks (PSBs) from 2010-11 to 2017-18; and
- (b) the measures  taken  by  the Government  in resolving  NPAs  of PSBs from June,  2014 onwards?

## ANSWER

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

(a): As per Reserve  Bank of India (RBI) guidelines  and policy  approved  by  bank  Boards, non-performing  loans,  including, inter-alia , those in respect of which  full  provisioning has been made on completion  of four years  are removed  from the balance-sheet  of the bank concerned   by   way   of  write-off.   Thus,   the  amounts   written  off  during   recent   financial years  are substantially on account  of such stressed loan accounts  of earlier  years,  which have been transparently recognised  following  AQR  and fully  provisioned.  Banks writeoff NPAs  as part  of their  regular  exercise  to clean  up their  balance-sheet,  tax benefit  and capital   optimisation. Borrowers   of  such  written-off   loans  continue   to  be  liable   for repayment.   Recovery   of  dues  takes   place  on  ongoing   basis  under legal   mechanisms, which   include, inter  alia, the  Securitisation   and  Reconstruction of  Financial   Assets  and Enforcement   of  Security   Interest   Act,   2002  (SARFAESI   Act)   and  Debts  Recovery Tribunals.  Therefore,  write-off  does not benefit  the borrower.

(b): A number  of measures  have been taken  to expedite  and enable resolution  of NPAs of PSBs over the last four years.  The Insolvency  and Bankruptcy Code,  2016 (IBC) has been  enacted  to  create   a  unified   framework for  resolving   insolvency   and  bankruptcy matters. 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  effected  a  fundamental   change   in  the  creditor-debtor

The details   of  reduction   in  NPAs   due  to  write-offs   (including   compromise)   of  Public Sector Banks (PSBs) from financial  years  2010-11 to 2017-18 are at Annexure.

relationship. 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. As per RBI's directions,  cases have been filed under IBC before the National  Company  Law Tribunal  (NCLT)  in respect of 39 large  defaulters,  amounting  to about Rs. 2.69 lakh  crore  funded exposure (as  of December  2017). SARFAESI  Act has been amended  to make  it more effective with  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,   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  one-time  settlement platforms and committed to monitoring large-value accounts through specialised monitoring  agencies.

## Lok Sabha Unstarred  Parliament  Question  No. 1753,  for  27.7.2018 Reduction in NPAs due to write-offs  including  compromise of Public Sector Banks

| Financial Year   | Amount   |
|------------------|----------|
| 2010-11          | 17,794   |
| 2011-12          | 15,551   |
| 2012-13          | 27,231   |
| 2013-14          | 34,409   |
| 2014-15          | 49,018   |
| 2015-16          | 57,585   |
| 2016-17          | 81,683   |
| 2017-18          | 1,28,229 |

Amounts  in crore  Rs.

*Write-offs   are  done  after  full provisioning,   and  as  per  RBI's guidelines   and  policy   approved by bank Boards, nonperforming loans, including, inter-alia , those in respect of which  full  provisioning  has been made  on  completion   of four years, are removed from  the balance-sheet of the bank concerned   by   way   of  write-off. Further,  the process of recovery of  dues  from  the  borrower   in such loan accounts continues and, therefore, the write-off does not benefit  the borrower.

Source: RBI (global operations)