Lok Sabha Question No. 528 (UNSTARRED), answered on 2023-07-24
Subject: Recovery of Bad Loans
Ministry: FINANCE
Asked by: S. Gnanathiraviam

## GOVERNMENT OF INDIA MINISTRY OF FINANCE

## LOK SABHA UNSTARRED QUESTION NO-528

ANSWERED ON- 24/07/2023

## RECOVERY OF BAD LOANS

## 528. SHRI GNANATHIRAVIAM S. SHRI VIJAYAKUMAR ( ALIAS ) VIJAY VASANTH

Will the Minister of FINANCE be pleased to state:-

(a) the effective measures adopted by the Union Government to recover the bad loans and NPA amount from corporate companies owing debts to the tune of Rs. 1000 crore or more;

(b) the total outstanding loan from such customers and the total loan amount recovered during the last nine years; and

(c) the steps taken to recover the bad loans and to reduce NPA?

## ANSWER

## THE MINISTER OF STATE IN THE MINISTRY OF FINANCE

## (DR. BHAGWAT KARAD)

(a) to (c): As per the Central Repository of Information on Large Credits (CRILC) data, the  total  funded -amount  outstanding  of  scheduled  commercial  banks  (SCBs)  to corporate  company  borrowers,  classified  as  non-performing  assets  (NPA)  and  having amount outstanding of Rs. 1,000 crore or more was Rs. 1,03,975 crore as on 31.3.2023. The Reserve Bank of India (RBI) has apprised that the total loan amount recovered from corporate company borrowers classified as NPAs is not maintained by it.

Comprehensive measures have been taken by the Government and RBI to recover and to reduce NPAs, including those pertaining to corporate companies, which has enabled an aggregate recovery of Rs. 10,16,617 crore (RBI provisional data for FY 2022-23) by SCBs during the last nine financial years. These measures include, inter alia , the following:

- (1) Change  in  credit  culture  has  been  effected,  with  the  Insolvency  and  Bankruptcy Code, 2016 (IBC) fundamentally changing the creditor-borrower relationship, taking away  control  of  the  defaulting  company  from  promoters/owners,  and  debarring wilful defaulters from the resolution process. To make the process more stringent, personal  guarantor  to  corporate  debtor  has  also  been  brought  under  the  ambit  of IBC.
- (2) The  Securitisation  and  Reconstruction  of  Financial  Assets  and  Enforcement  of Security Interest Act, 2002 has been amended to make it more effective.
- (3) National  Asset  Reconstruction  Company  Limited  has  been  set  up  as  an  asset reconstruction company with an aim to resolve stressed assets above Rs. 500 crore
4. each. Government has also approved extending a guarantee of up to Rs. 30,600 crore to  back  Security  Receipts  issued  by  NARCL  to  Lending  Institutions  for  acquiring stressed loan assets.
- (4) PSBs have also created Stressed Asset Management Verticals for stringent recovery, segregated pre- and post-sanction follow-up roles for clean and effective monitoring, and engaging specialised monitoring agencies for monitoring of large-value accounts.
- (5) CRILC  collects,  stores  and  disseminates  credit  data  to  lenders,  and  banks  are required  to  submit  report  on  weekly  basis  to  CRILC,  in  case  of  any  default  by borrowing entities with exposure of Rs. 5 crore and above.
- (6) Under  the  PSB  Reforms  Agenda,  comprehensive  and  automated  Early  Warning Systems  (EWS) were instituted  in  PSBs,  with  ~80  EWS  triggers  and  use  of  thirdparty data for time-bound remedial actions in the borrowing accounts.
- (7) Wilful  defaulters  are  not  sanctioned  any  additional  facilities  by  banks  or  financial institutions, and their unit is debarred from floating new ventures for five years.
- (8) Wilful defaulters and companies with wilful defaulters as promoters/directors have been debarred from accessing capital markets to raise funds.
- (9) Prudential Framework for Resolution of Stressed Assets was issued by RBI in 2019 to provide a framework for early recognition, reporting and time bound resolution of stressed assets, with a build-in incentive to lenders for early adoption of a resolution plan.

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