The recovery as a percentage of gross non-performing assets moderated to 12.8 percent in 2020-21 from 15.8 percent in the previous fiscal year against the backdrop of the pandemic, Minister of State for Finance Bhagwat K Karad informed Parliament on Monday.
As per Reserve Bank of India data on global operations, he said, scheduled commercial banks (SCBs) have recovered an amount of Rs 4,18,687 crore during the last three financial years.
Recovery as a percentage of gross non-performing assets (NPAs) of SCBs stood at 13.1 percent in 2017-18, he said adding it rose to 15.1 percent in 2018-19 and to 15.8 percent in 2019-20.
After that, it declined to 12.8 percent in 2020-21 (provisional data as on March 31, 2021) against the backdrop of the pandemic, he said.
Comprehensive steps have been taken by the government for speedy recovery of NPAs, including those of public sector banks (PSBs), he said in a written reply to the Lok Sabha.
Change in credit culture has been effected, with the Insolvency and Bankruptcy Code (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, he said.
To make the process more stringent, personal guarantor to corporate debtor has also been brought under the ambit of IBC, he said.
Under IBC, resolution plans have been approved in 394 cases up to June 2021, with Rs 2.45 lakh crore amount realisable by financial creditors, he added.
Besides, he said, a framework has been put in place through rules under IBC for insolvency and liquidation proceedings of systemically important financial service providers other than banks, which were earlier not covered under IBC.
Under this, resolution plan for such financial service providers for realisable amount of Rs 37,167 crore has been approved, he said.
With government infusion supplementing the raising of capital by PSBs from market, he said, PSBs have achieved a high provisioning coverage ratio of 83.7 percent as on March 31, 2021, equipping them to take decision on resolution of NPAs without being constrained on account of such decision impacting their profitability.
Replying to another question, Karad said Indian Banks' Association has apprised the government of the incorporation of the National Asset Reconstruction Company Limited (NARCL) and that it was registered with the Registrar of Companies on July 7, 2021.
RBI, being the regulator of Asset Reconstruction Companies (ARCs), has already prescribed a regulatory framework for the functioning of ARCs, he said.
Also, there are well-laid norms for transfer of stressed assets by banks and non-banking financial companies to ARCs and identification of non-performing assets by an ARC is an ongoing process.