NEW DELHI: Public sector banks reported recovery of Rs 60,713 crore against non-performing assets (NPAs) in the first half of the current year, which is double of the amount recovered in the corresponding period last year and more significant returns on high-value accounts are expected, the government has said.

In response to a parliamentary question, the finance ministry said following amendments to the Banking Regulation Act, the Reserve Bank of India directed banks to initiate insolvency proceedings before the National Company Law Tribunal in 41 cases, 12 of which had cumulative outstanding of Rs 1,97,769 crore as on March 31, 2017. The remaining 29 had an outstanding of Rs 1,35,846 crore as on June 30, 2017.

“As per RBI data on global operations (with provisional data for September 2018), during the last three and a half financial years, NPAs of scheduled commercial banks reduced by Rs 2,83,770 crore due to recoveries,” the government told BJP MPs Kirti Azad and Bharatiben Shiyal.

The government said measures such an asset quality review (AQR) initiated in 2015 for clean and fully provisioned balance sheets revealed a high incidence of NPAs that were piling up since 2008 — a period when UPA was in office. “As per RBI inputs, primary reasons for spurt in stressed assets is aggressive lending practices, wilful default, loan frauds, corruption in some cases and an economic slowdown,” it added.

The AQR enforced by the Modi government led to stressed accounts being reclassified as NPAs and expected losses were provided for. The transparent recognition of stressed assets led to gross NPAs of scheduled commercial banks increasing from Rs 2,51,054 crore as on March 31, 2014 to Rs 3,09,399 crore on March 31, 2015; Rs 5,66,247 crore on March 31, 2016; Rs 7,28,740 crore on March 31, 2017 and Rs 9,62,621 crore on March 31, 2018. This provisionally declined to Rs 9,46,062 on September 30, 2018.

The government said rise in NPAs was in good part due to banks being made to recognise stressed assets as NPAs and the withdrawal of restructuring schemes in 2017-18. This led to an honest appraisal of the state of bank finances and the role played by indiscreet and risky lending in the past.

With the adoption of a ‘creditor-in-saddle’ approach under the Insolvency and Bankruptcy Code, and interim resolution professionals taking over management of a corporate debtor at the outset, the incentive to abuse the legal system has been taken away, the finance ministry said.

The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, has been amended to make it more effective with a three-month jail term for a borrower who does not provide asset details and for the lender to get possession of mortgaged property in 30 days.

Public sector banks have created stressed asset verticals for stringent recovery, set our protocols for pre and post sanction and close monitoring of large value accounts.

