Lok Sabha Question No. 3623 (UNSTARRED), answered on 2019-07-15
Subject: New Scheme for Corporate Debt Restructuring
Ministry: FINANCE
Asked by: Bhartruhari Mahtab, Rahul Ramesh Shewale, M. K. Raghavan, Sangeeta Kumari Singh Deo, N.K. Premachandran, P.R. Natarajan

## GOVERNMENT  OF INDIA MINISTRY  OF FINANCE

ANSWERED  ON-15.07.2019

## LOK SABHA UNSTARRED QUESTION NO-3623

## NEW SCHEME FOR CORPORATE  DEBT RESTRUCTURING

3623.

SHRI BHARTRUHARI MAHTAB SHRI RAHUL  RAMESH  SHEWALE SHRI M.K. RAGHAVAN SHRIMATI  SANGEETA  KUMARI  SINGH DEO SHRI N.K. PREMACHANDRAN SHRI P.R. NATARAJAN

Will  the Minister  of FINANCE  be pleased to state:

- (a) whether  the Government  proposes a new  scheme for corporate  debt restructuring to deal  with   the  genuine   and  wilful   defaulters   separately, if  so,  the  details   and  the  salient features  thereof  along  with  the time  by  which  this  scheme is likely to  be implemented;
- (c)  whether   the  Government   proposes  to  write   off  the  dues  of  corporates,   if  so,  the details  thereof,  corporate  and bank-wise;
- (b)  whether   the  Government   has  ascertained   the  impact   of  such  scheme  on  the  NonPerforming  Assets (NPAs)  of the banks,  if so, the details  thereof  and if not,  the reasons therefor  along  with  the likely  benefits  of such scheme to the banks;
- (d)  whether   the  Government   has  executed   or  proposes   to  execute   any   inter-creditor agreement  aimed  to help  the debt defaulters,  if so, the details  thereof;  and

## ANSWER

- (e)  the  details   of  the  above  Rs.  10,000  crore   corporate   loans  released   by   various nationalised   banks,   the  security   obtained   against   such  loans   and  the  details   of  the corporate  defaulters  of above Rs. 100 crore  during  each of the last four years,  corporate and bank-wise  along  with  the steps taken/proposed  to be taken  by  the Government  to recover  the amount  from  such defaulters?

## THE MINISTER  OF STATE  IN THE  MINISTRY  OF FINANCE (SHRI  ANURAG  SINGH  THAKUR )

Defaulters  other  than  wilful  defaulters  and certain  other  categories  of ineligible  persons, are eligible  to submit  a resolution  plan  under  the insolvency  resolution  process under  the Code  upon  meeting   certain   conditions   specified   in  section  29A.   Further,   regulated lenders   are  required   to  put  in  place  Board-approved   policies   for  resolution   of  stressed assets in terms  of RBI's circular  dated 7.6.2019  on 'Prudential  Framework for Resolution of  Stressed  Assets'.  As  per  RBI's  instructions, banks   are  also  required   to  have  a  loan recovery  policy,  which  may  cover, inter-alia , negotiated  settlements of  NPAs.

- (a) The Government  had introduced  legislation  to  amend  the Insolvency  and Bankruptcy Code,  2016, which  was incorporated  as section  29A in the Code,  making  wilful  defaulters ineligible   to  submit   a  resolution   plan   (which   may   include, inter-alia ,  corporate   debt restructuring) under the  insolvency   resolution   process  under the  Code.   Further,   as  per Reserve   Bank  of  India  (RBI)  instructions, wilful   defaulters   are  not  sanctioned   any additional  facilities  by  banks  or financial  institutions.

(b) Does not arise.

- (c) No, sir.
- (e) RBI has furnished  the following  details  of unique  borrowers  of Public  Sector  Banks (PSBs) in their   global   operations   for  the  last  four   financial   years,   with   funded   amount outstanding  of more  than  Rs. 10,000 crore:

| Financial year             |   Unique number of borrowers |
|----------------------------|------------------------------|
| 2015-16                    |                           37 |
| 2016-17                    |                           34 |
| 2017-18                    |                           37 |
| 2018-19 (provisional data) |                           48 |

Further,   as  per  RBI's  inputs,   details   of  NPA   borrowers   of  PSBs  with   gross  NPA outstanding  of more  than  Rs. 100 crore  are as under:

| Financial year             |   Unique number of borrowers |
|----------------------------|------------------------------|
| 2015-16                    |                          661 |
| 2016-17                    |                          696 |
| 2017-18                    |                          792 |
| 2018-19 (provisional data) |                          739 |

RBI has informed  that  under  the provisions  of section  45E of the Reserve  Bank of India Act,   1934,  it  is  prohibited   from   disclosing   credit   information   and  bank/borrower-wise data from the Central  Repository  of Information  on Large Credits.  Section  45E provides that   credit   information submitted  by  a bank  shall  be treated  as confidential  and not be published  or otherwise  disclosed.

- (1) The Insolvency  and Bankruptcy  Code,  2016 (IBC) has been enacted,  which  has provided  for taking  over the management  of the affairs of the corporate  debtor  at the outset of the corporate insolvency resolution process. Coupled with debarment  of wilful  defaulters  and persons associated  with  NPA  accounts  from the  resolution   process,   this   has  effected  a  fundamental   change   in  the  creditordebtor  relationship.

Comprehensive  measures  have been taken  to expedite and enable recovery  from NPA accounts,  including  NPA  accounts  of above Rs. 100 crore.  These include, inter-alia ,  the following -

- (d) No,  sir.
- (2) Securitisation and  Reconstruction   of Financial   Assets  and  Enforcement   of Security   Interest   Act,   2002  has  been  amended   to  make   it  more   effective,   with provision  for three  months'  imprisonment in case the borrower  does not provide asset details,  as well  as a provision  for the lender  to get possession of mortgaged property  within  30 days.
- (4) Under  the PSB Reforms  Agenda,  PSBs have created  Stressed Asset Management Verticals  to focus attention  on recovery,  segregated  monitoring from sanctioning roles  in  high-value   loans,   and  entrusted   monitoring of  loan   accounts   of  above Rs. 250 crore to specialised monitoring agencies for clean and effective monitoring,   and  created   online   end-to-end  One-Time   Settlement   platforms   for timely  and better  realisation.
- (3) Suits for recovery  of dues are also filed by  banks  before DRTs.  Six new  DRTs have been established to  expedite recovery.

Enabled by the above steps, as per RBI data on global  operations  (provisional  data for the financial  year  ending  March  2019), PSBs have recovered  Rs. 3,09,568 crore  over the last  four  financial   years,   including   record   recovery   of  Rs.  1,21,076 crore   during   the financial  year  (FY) 2018-19 (provisional  data as reported  by  RBI on 2.7.2019).

Note: Figures cited above for PSBs for FY 2018-19 exclude those for IDBI Bank Limited, which was recategorised as a private sector bank by RBI with effect from 21.1.2019. *****