Bad loan recoveries at ₹45,593 crore surpass write-offs in 2018-19: Sitharaman

Finance Minister Nirmala Sitharaman during the Budget Session, in New Delhi (Photo: PTI)

New Delhi: Recovery of bad loans at 45,593 crore in PSBs was much faster than the total write-offs during 2018-19, Finance Minister Nirmala Sitharaman said in Parliament Monday.

The write-offs stood at 36,377 crore during the year, the minister said.

The year-on-year rise in recoveries and recapitatlisation in public sector banks (PSBs) during financial year 2018-19 was much faster than the rise in write-off figures on bank loans, Sitharaman said in a written reply in the Lok Sabha.

“Recoveries and recapitalisation rose by 61,593 crore (comprising of a rise of 45,593 crore in recoveries, as per RBI data, and 16,000 crore in recapitalisation), whereas write-off figures grew by 36,377 crore (as per RBI data),” she said.

The minister was responding to a question whether the write-off figures on bank loans are rising every year, much faster than recoveries and recapitalisation.

In the last four financial years, PSBs have recovered 3.59 lakh crore, including record 1.23 lakh crore in 2018-19.

Also, the aggregate gross advances of PSBs increased from18.19 lakh crore by March 2008 to 52.16 lakh crore by end of March 2014, as per RBI data on global operations.

The minister said that the primary reasons for spurt in stressed assets in banks have been due to aggressive lending practices, wilful default/loan frauds/corruption in some cases and economic slowdown.

The RBI initiated the Asset Quality Review (AQR) in 2015 for clean up of bank balance sheet by gauging the right amount of bad loans and making appropriate provisions towards that, Sitharaman said.

The transparent recognition of stressed assets as NPAs led to higher gross bad loans at 8.95 lakh crore as on March 31, 2018 against earlier estimate of 2.79 lakh crore as on March 31, 2015.

However, the 4R’s strategy of recognition, resolution, recapitalisation and reforms have led to decline in bad loans by89,189 crore to 8.06 lakh crore as on March 31, 2019, the minister said.

The government has taken steps under 4R’s strategy of recognising non-performing assets (NPAs) transparently, resolving and recovering value from stressed accounts, recapitalising PSBs and reforms in banks and financial ecosystem to ensure a responsible and clean system, she said.

To improve recovery, number of steps including enactment of Insolvency and Bankruptcy Code, 2016 (IBC), amendment in Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act and creation of stressed asset management verticals under the PSB reforms agenda.

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