Lok Sabha Question No. 3584 (UNSTARRED), answered on 2019-07-15
Subject: Old Currency Swap
Ministry: FINANCE
Asked by: Kotha Prabhakar  Reddy

## GOVERNMENT  OF INDIA MINISTRY OF FINANCE

## LOK SABHA I]NSTARRED  QUESTION  NO. 3584

ANSWERED ON 15.07.2019

## OLD CURITENCY SWAP

## 3584. SHzu KOTIIA PRABHAKAR  REDDY

Will the Minister of FINANCE be pleased  to state:

- (a) the total amount  ofold currency  swap by the Govemment  in2016-17;
- (b) the total amount  ofnew currency  pumped  in the market  till the end of demonetisation  and  till date;
- (c)  the details  of total Non-Performing  Assets  (NPAs)  in percentage term and the total GDP at the end of demonetisation and till date, respectively;
- (d) whether it was possible  to track the defaulter  NPAs  at the time of demonetisation; and
- (e) if so, the details  thereofalong  with the reaction  ofthe Government  thereto  and ifnot, the reasons  therefor?

## ANSWER

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

- (a): The total  value  of Specified Bank Notes (SBNs) returned  fiom circulation is Rs.l5,3  10.73 billion
- (b): Details  of currency supplied  in last two years is as follows:

| Year       | Rs.l0   | Rs.20   | Rs.50   | Rs.l00   | Rs.200   | Rs.500 (ord Design)   | Rs.500 (New Design)   |   Rs. 1000 | Rs. 2000   | Total   | Value Crore   |
|------------|---------|---------|---------|----------|----------|-----------------------|-----------------------|------------|------------|---------|---------------|
| 2016- 2017 | 2,18s   | 4,1 l8  | 2,700   | 5,738    | 0        | 2,013                 | 7,260                 |        925 | 3,504      | 29,043  | 13,38,851     |
| 2017- 2018 | 4,313   | 2,051   | 2,793   | 3,170    | 2,832    | 0                     | 9,693                 |          0 | l5l        | 25,003  | 6,25,s70      |

(ln mpcs)

- (c): Gross NPA ofscheduled Commercial Banks to Gross Advances,  as per RBI data on global operalions, were9.20%oason3l.l2.20l6andg.lSokason3l.3.20l9.GrossDomesticProductatCurrentMarketPricesin year 2016-17,2017-18 and 2018-19 (Provisional  Estimate) were { 1,53,62,386  crore, { 1,70,95,005  crore  and { 1,90,10,164  crore.

(d) & (e): In terms of the RBI circular  on Reporting to Central  Repository  of Infonnation on Large  Credits (CRILC) dated May 22,2014 and subsequent  amendments thereto, lenders  shall report  credit information, including  classification ofan account  as Special  Mention Accounts  (SMA)  to Central Repository  of Information on Large Credits (CRILC),  on all borrowers having aggregate exposure  of{ 5 crore  and above with them.

As per Reserve Bank of India (RBI) data on global operations, aggregate gross advances  of Scheduled Commercial Banks (SCBs) increased  from Rs.25,03,431 crore as on 31.3.2008  to Rs.68,75,748 crore as on 3 I .3.2014.  As per RBI inputs, the primary reasons for spurt in stressed assets  have  been observed to be, inter-alia, aggressive  Iending  practices, wilful default/loan frauds/corruption  in some  cases, and economic slowdown. Asset Quality  Review (AQR) initiated  in 2015 for clean and fully provisioned  bank  balances-sheets  revealed high incidence  of Non-Performing  Assets (NrPAs). As a result  of AQR and subsequenl  lransparent recognition  by banks, stressed accounts were reclassified  as NPAs and expected losses on stressed  loans, not provided for earlier under flexibility  given to restructured  loans, were provided  for. Further, all such  schemes for restructuring  stressed loans were withdrawn.  Primarily  as a result oftransparent recognition ofstressed assets  as NPAS, gross NPA  ratio of SCBs, as per RBI data on global operations,  rose from 4.28%o as on 31.3.2015  to 9.20yo as on 31.12.2016  and to ll.l8% as on 31.3.2018, and as a result of Govemment's 4R's strategy of recognition,  resolution, recapitalisation  and reforms,  have  since declined  to 9.08%  as on 31.3.2019  (provisional  data).

Government  has implemented  a comprehensive  4R's strategy consisting of recognition of NPAs transparently,  resolution and recovering  value from  stressed accounts, recapitalising  Public  Sector Banks (PSBs), and reforms in PSBs and financial  ecosystem  to reduce  NPAs and strengthen PSBs. Steps taken under this strategy  include, inter-alia, the following:

- (l) Change in credit  culture was effected,  with the Insolvency and Bankruptcy  Code (IBC) fundamentally changing  the creditor-borrower  relationship,  taking away control of the defaulting company  from promoters/owners and debarring willful defaulters from the resolution process  and debarring them from raising funds  ftom the market.
- (2) Over the last four financial years,  PSBs were recapitalized to the extent of Rs. 3.12 lakh crore, with infusion of Rs. 2.46 lakh crore by the Government and mobilization  of over Rs. 0.66 lakh crore  by PSBs themselves.
- (3) Key reforms were instituled  in PSBs as part ofPSBs Reforms  Agenda, include the following
- (D Board-approved Loan Policies  ofPSBs  now mandate  tying up necessary  clearanceVapprovals and linkages before disbursement,  scrutiny  ofgroup balance-sheet  and ring-fencing  ofcash flows, nonfund and tail risk appraisal  in project financing.
- (iD 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.
- (iii) Monitoring has been strictly segregated  from sanctioning roles in high-value  loans, and specialized  monitoring  agencies combining  financial  and domain knowledge  have been deployed  for effective  monitoring of Ioans above Rs. 250 crore.
- (iv) To ensure timely and bener realization in one-time settlements  (OTs), online end-to- end OTS platforms  have been  se1 up.

Enabled  by the above steps, financial gains  from cleaning  of the banking system are now amply visible. Gross NPAs of SCBs, as per RBI data on global  operations  (including provisional data for March 2019, as reported  on 2.7.2019), have reduced  over the lasl financial  year by Rs.1,02,562  crore, and recovery  of Rs.4,01,424  crore has been effected by these  banks over the last four financial  years.  including  a record  recovery ofRs.1,56,746  crore in the last financial  year.