Lok Sabha Question No. 4087 (UNSTARRED), answered on 2022-03-28
Subject: NPAs under PMEGP
Ministry: FINANCE
Asked by: Rajashree Mallick

## GOVERNMENT OF INDIA MINISTRY OF FINANCE

## DEPARTMENT OF FINANCIAL SERVICES

## LOK SABHA

## UN-STARRED QUESTION NO. 4087

TO BE ANSWERED ON 28 th  MARCH, 2022 / 7 CHAITRA, 1944 (SAKA)

## 'NPAs under PMEGP'

4087: SHRIMATI RAJASHREE MALLICK:

Will the Minister of FINANCE be pleased to state:

- (a)  whether  banks  are  raising  high  incidence  of  Non-Performing  Assets  (NPAs)  under Prime Minister Employment Generation Programme (PMEGP) in various forums, one of the reasons for such high NPA may be scaling down the project cost and not making full disbursement and if so, the reasons of such high incidence;

(b)  whether the Government proposes to amend the giving more leverage to SFCs with diversification of activities commensurating the present competitive business scenario and if so, the details thereof; (c) whether the Government is providing budgetary support to commercial banks against their NPAs and if so, the details thereof; d)  whether the Government proposes to give any budgetary grant to SFCs against their

- NPAs; and

(e) if so, the details thereof?

## ANSWER

## MINISTER OF STATE IN THE MINISTRY OF FINANCE

(DR. BHAGWAT KARAD)

(a): The Reserve Bank of India (RBI) has issued the Lead Bank Scheme for coordinating the  activities  of  banks  and  other  developmental  agencies  through  forums  such  as  the Block  Level  Bankers'  Committee,  District  Consultative  Committee  and  State  Level Bankers'  Committee,  in  order  to  achieve  the  objective  of  enhancing  the  flow  of  bank finance to the priority sector and other sectors and to promote banks' role in the overall development of the rural sector. As part of mandate of the said forums to  review credit disbursement  by  banks,  the  forums  are  also  mandated  to  discuss  lending  towards government sponsored schemes and the position of NPAs in respect of schematic lending and pursuant to this, banks also discuss in these forums the position of NPAs in lending towards various such schemes, including PMEGP.

The  incidence  of  NPAs  in  lending  by  banks,  including  towards  government  sponsored schemes such as PMEGP, is attributable to several factors, which may include prevailing macroeconomic conditions, sectoral issues, global business environment, delayed recognition  of  stress  by  the  banks,  improper  risk  pricing  and  poor  credit  underwriting, governance issues in the borrowing entities, and requirement of funds turning out to be at variance from the scale of finance assessed due to reasons like lack of specialised skills for project appraisals, time and cost overruns in project implementation, etc.

(b): No proposal is currently under consideration of the Government to make amendments in  the  State  Financial  Corporations Act, 1951 for  giving more leverage to State Finance Corporations with diversification of activities.

(c): Government as the promoter of public sector banks infuses capital in these banks as consideration for shares issued by the banks to the Government. Banks are required to make provision for NPAs in accordance with the norms laid down by RBI in this regard, and they accordingly make such provision out of their operating profits.

(d): No such proposal is under consideration of the Government.

(e): Question does not arise.

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