Lok Sabha Question No. 1051 (UNSTARRED), answered on 2021-02-08
Subject: FSR of RBI
Ministry: FINANCE
Asked by: K. Subbarayan

## GOVERNMENT OF INDIA MINISTRY OF FINANCE

## LOK SABHA UNSTARRED QUESTION NO-1051

ANSWERED ON- 08/02/2021

## FSR OF RBI

Will the Minister of FINANCE be pleased to state -

- (a) whether it is a fact that the Financial Stability Report (FSR) of the Reserve Bank of India (RBI) has stated that banks' gross Non-Performing Assets (NPAs) may rise sharply to 13.5 per cent by September; 2021;
- (6) if the details thereof; and SO,
- the  details of the preemptive strategies planned for with   potential NPAs and aggressive recapitalization of the sector banks? dealing being public

## ANSWER

## THE MINISTER OF STATE IN THE MINISTRY OF FINANCE

## (SHRI ANURAG SINGH THAKUR)

- (a) to (c): The Financial Stability Report (FSR) released by Reserve Bank of India (RBI) in January 2021 states that the gross non-performing asset (GNPA) ratio of Scheduled Commercial Banks (SCBs), under the baseline scenario, may increase from 7.5 per cent in September 2020 to 13.5 percent by September 2021

As per RBI inputs, the said GNPA ratio has been arrived at without factoring in the impact of the policy actions under Way, viz, RBT$ resolution framework for COVID-19related stress and one-time restructuring of loans to micro, small and medium enterprises (MSMEs), which aim to facilitate revival of real sector activities and  mitigate the pandemic' S impact on borrowers: Under the said framework/ scheme; resolution/restructuring of eligible loan accounts is permitted without asset classification downgrade Therefore, the actual movement of GNPA ratio of SCBs will depend on the extent to which the benefit of the said framework/ scheme is availed of by the eligible borrowers and facilitates revival and mitigates the pandemic'$ impact on borrowers

Loan accounts become non-performing due to a variety of factors, which may be economy-wide Or to a sector Or a firm: Appropriate monetary policy, fiscal policy and  regulatory measures   are taken from time to time to address economy-wide and sector-specific issues with a view to achieve macroeconomic and secure financial stability In the context of economic slowdown; the impact of the pandemic and the need specific goals to support post-pandemic recovery, strategies were formulated and accordingly comprehensive measures been taken under Governments Aatma Nirbhar Bharat Abhiyaan economic   package and RBIs   regulatory   package, revival framework and monetary  policy steps to mitigate debt servicing burden and pandemic' S impact on borrowers, to ensure business continuity and to facilitate revival of real sector activities while ensuring the profitability of the banks and bringing down the bad loans: have

- (a) RBI has provided a framework for lenders to implement  resolution plans in respect of eligible loans to corporates and micro, small and medium enterprises (MSMEs) , to enable lending institutions to offer customised relief to borrowers in the form of restructuring; without   downgrading the loan as an NPA. Such restructuring may the grant of various concessions to the borrower in terms of altering the total amount to be repaid, instalment amounts and the rate of interest; extending moratorium and/or the residual periods of repayment; waiving interest and charges, converting the accumulated interest into a fresh loan with a deferred payment schedule, and sanction of additional loan. entail penal

These include, inter alia, the following:

- (6) the 26 sectors   which the Kamath Committee  identified as visible impact of the pandemic, RBI has prescribed certain financial parameter ranges for the aforesaid resolution plans. These ranges are typically more liberal than the benchmark ranges generally adopted by leading banks such as State Bank of India and have enabled higher sector-specific relief for deep/ comprehensive restructuring: having For
- d) Government had issued an advisory for extension of registration and dates of real estate projects under Real Estate Regulatory Authorities by teating COVID-19 as an event of force majeure, and for loans to the commercial real estate sector; additional time of one year has been given for extension of the date for commencement for commercial operations. completion
3. (c) The debt servicing burden for borrowers have been substantially reduced as a result of reduction in the benchmark policy rate and liquidity enhancing measutes taken by RBI, with reduction of 1.14% in the monthly weighted average rate On fresh Rupee loans of SCBs from March to December 2020 and reduction of 0.73% on theit outstanding Rupee loans over the same lending period:
4. (e) In addition; following measures have been taken for MSMEs:
5. () Furthet; a scheme for emergency credit line of up to Rs 3 lakh crore, backed by 100% Government guarantee, has been launched for additional funding of up to 20% of the fund-based outstanding as on 29.2.2020, subject enterprises with turnover of up to Rs. 250 crore, and with a higher maximum of Rs 100 crore for 27 sectors construction, gems and jewellery and automobile sectors Till 25.1.2021,Rs. 2.39 lakh crore have been sanctioned under this scheme: mining; specified
6. @) A liberal restructuring scheme for MSMEs with loan exposure of up to Rs 25 crore has been introduced by RBI offering sector-specific relief to the entire MSME sector:

Banks on an ongoing basis both for credit growth and for regulatory norms for adequacy loans, for which source through internal generation and from matkets. Government infuses in sector banks (PSBs) from time to time to supplement their efforts to meet theit capital requirements: the current financial yeat, till 31.1.2021, PSBs have raised capital of Rs: 50,982 crore in the form of equity and bonds: To supplement Government has infused of Rs. 5,500 crorein PSBs out of budget provision of Rs. 20,000 crore made for this purpose in the current financial year: Further; for the financial year 2021-22, provision of Rs. 20,000 crore for recapitalisation of PSBs has been included in the budget proposals tabled in Parliament: require capital meeting capital against existing they capital capital capital public During this, capital