Lok Sabha Question No. 56 (STARRED), answered on 2023-07-24
Subject: National Asset Reconstruction Company(NARC)
Ministry: FINANCE
Asked by: P. Velusamy

## GOVERNMENT OF INDIA MINISTRY OF FINANCE

## LOK SABHA STARRED QUESTION NO. *56 ANSWERED ON 24.07.2023

## National Asset Reconstruction Company (NARC)

## *56. Shri Velusamy P.:

Will the Minister of FINANCE be pleased to state:

- (a) the  total  aggregate  of  debt  as  on  date  of  National  Asset  Reconstruction  Company (NARC) and the details of companies acquired by it;
- (b) whether the NARC has been able to recover money from the bad loan acquired by it;
- (c) if so, the details of amount recovered; and
- (d) the steps taken/being taken by the Government to recover the remaining bad debts?

## ANSWER

## FINANCE MINISTER (SMT. NIRMALA SITHARAMAN)

- (a) to (d): A statement is laid on the Table of the House.

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## Statement referred to in reply to parts (a) to (d) in respect of Lok Sabha Starred Question No. *56 for reply on 24.07.2023 regarding National Asset Reconstruction Company (NARC) asked by Shri Velusamy P.

(a) to (d): The National Asset Reconstruction Company Limited (NARCL) has apprised that  as  on  17.7.2023,  it  has  acquired  3  borrower  entities, viz. Jaypee Infratech Limited, SSA  International  Limited,  Helios  Photo  Voltaic  Limited,  with  an  aggregate  debt exposure of Rs. 21,349 crore. NARCL has further informed that these assets have been acquired only in the fourth quarter of the financial year (FY) 2022-23, and no recovery has  been  made  in  these  accounts  as  of  17.7.2023.  Further,  in  respect  of  one  more account, i.e. SPML Infra Limited, letter of approval for debt acquisition of Rs. 1,994.90 crore  has  been  issued  by  the  lenders,  and  in-principal  approval  for  the  government guarantee has also been issued.

Comprehensive measures have been taken by the Government and RBI to recover the bad debts, enabled by which, scheduled commercial banks have recovered a total amount of Rs. 7.16 lakh crore (RBI provisional data for FY 2022-23) during the last five financial years. These measures include, inter alia , the following:

- (1) Change  in  credit  culture  has  been  effected,  with  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) Pecuniary jurisdiction of Debt Recovery Tribunal (DRTs) was increased from Rs. 10 lakh  to  Rs.  20  lakh  to  enable  the  DRTs  to  focus  on  high  value  cases  resulting  in higher recovery for the banks and financial institutions.
- (4) Public sector banks have 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  largevalue accounts.
- (5) NARCL has been set up as an asset reconstruction company with an aim to resolve stressed assets above Rs. 500 crore each. Government has also approved extending a guarantee of up to Rs. 30,600 crore to back security receipts issued by NARCL for acquisition of loan assets from lenders.
- (6) 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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