Lok Sabha Question No. 2670 (UNSTARRED), answered on 2025-03-17
Subject: Recovery of NPA through SARFAESI Act
Ministry: FINANCE
Asked by: Thiru Arun Nehru

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF FINANCIAL SERVICES

## LOK SABHA UNSTARRED QUESTION NO- 2670

ANSWERED ON MONDAY, MARCH 17, 2025/PHALGUNA 26, 1946 (SAKA)

## RECOVERY OF NPA THROUGH SARFAESI ACT

## 2670. THIRU ARUN NEHRU

Will the Minister of FINANCE be pleased to state:-

(a) the details of the recovery of bad loans or Non-Performing Assets (NPAs) through mechanisms such as SARFAESI Act and Debt Recovery Tribunals (DRTs) since 2019, year-wise and bank-wise;

(b) the details of the financial and policy support provided by the Government to public sector banks to address legacy NPAs and improve their balance sheets;

- (c)  the  initiatives  taken  to  educate  small  businesses  and  startups  on  financial  discipline and credit management and the mechanisms that are in place to ensure transparency and accountability in the resolution of NPAs across banks;

(d) the steps taken by the Government to strengthen credit appraisal systems and reduce the occurrence of fresh NPAs; and

(e)  whether the  Government is considering establishment of a centralized database for tracking large borrowers and stressed assets to improve coordination among banks and regulators in future and if so, the details thereof?

## ANSWER

## THE MINISTER OF STATE IN THE MINISTRY OF FINANCE

## (SHRI PANKAJ CHAUDHARY)

(a)  to  (d):  Year-wise  details  of  recovery  of  non-performing  assets  (NPAs)  through  the Securitisation  and  Reconstruction  of  Financial  Assets  and  Enforcement  of  Security Interest Act, 2002 (SARFAESI Act) and Debt Recovery Tribunals (DRTs) by scheduled commercial banks (SCBs) during the last five financial years are at Annex. The Reserve Bank  of  India  (RBI)  has  apprised  that  bank-wise  information  in  this  regard  is  not maintained by it.

Subsequent to the Asset Quality Review initiated by RBI, the government initiated 4R's strategy of recognising NPAs transparently, resolving and recovering value from stressed accounts  through  clean  and  effective  laws  and  processes,  recapitalising  public  sector banks,  and  reforms  in  banks  and  financial  ecosystem  to  address  the  problem  of  rising

NPAs and growing loan default. Enabled by these initiatives, gross NPAs of PSBs have declined  to  Rs.  3.02  lakh  crore  (gross  NPA  ratio  of  2.85%)  in  December  2024 (provisional  data)  from  a  peak  of  Rs.  8.96  lakh  crore  (gross  NPA  ratio  of  14.58%)  in March 2018.

Also, a number of steps have been taken by the government over the last few years under PSB Reforms Agenda to make credit management system in public sector banks robust by adoption of a comprehensive loan lifecycle management system, including an efficient system in loans disbursement and improved underwriting, and these steps include, inter alia, -

- (i) introduction  of  Early  Warning  Signals  (EWS)  systems  in  banks  for  time-bound remedial actions;
- (ii) adoption of prudential policies to ensure ring-fencing of cash flows;
- (iii) deploying specialised agencies for monitoring and creating stressed asset management verticals for resolution of stressed assets; and
- (iv) improved adherence to risk-based pricing.

Enabled by the aforesaid, PSBs' slippage ratio, i.e. fresh occurrence/accretion of NPAs as a  percentage  of  standard  advances,  has  declined  to  0.95%  in  December  2024  (RBI provisional data) from 8.35% in March 2018.

With  regard  to  initiatives  taken  to  educate  small  businesses  and  start-ups  on  financial discipline  and  credit  management,  National  Centre  for  Financial  Education  (NCFE), promoted by financial sector regulators,  has developed a financial education handbook for micro, small and medium enterprises (MSMEs). Centres for Financial Literacy (CFLs) and Financial Literacy Centres (FLCs) have also been set up across the country. FLCs Conduct camps, inter alia, for farmers, micro entrepreneurs and self-help groups.

With regard to transparency in accountability in resolution of NPAs by banks, as per RBI guidelines, banks are required to have in place a loan recovery policy, duly approved by their  respective  Boards.  Banks initiate  measures for recovery or  resolution of  NPAs in terms of the said policy.

(e):  The Central Repository of Information on Large Credits (CRILC) set up by RBI is already in place. CRILC collects, stores and disseminates credit data to lenders. Banks are required to furnish credit information to CRILC regarding all borrowers having aggregate fund and non-fund-based exposure of Rs. 5 crore and above with them on a monthly basis.  The  information  on  large  borrowers  is  shared  with  all  the  banks  to  bridge  the information gap which helps them in taking informed credit decision.

## Lok Sabha unstarred question no. 2670, regarding Recovery of NPA through SARFAESI Act

## Recovery by Scheduled Commercial Banks through Debt Recovery Tribunals (DRTs) and SARFAESI Act channels

(Amounts in crore Rs.)

| Financial Year   | DRTs   | SARFAESI Act   |
|------------------|--------|----------------|
| 2018-19          | 10,847 | 38,905         |
| 2019-20          | 9,986  | 34,283         |
| 2020-21          | 8,113  | 27,686         |
| 2021-22          | 12,035 | 27,349         |
| 2022-23          | 39,785 | 30,957         |
| 2023-24          | 16,202 | 30,460         |

Source: RBI (provisional data for 2023-24)

*****