Gross non-performing assets of scheduled commercial banks declined by Rs 1.02 lakh crore to Rs 9.34 lakh crore in 2018-19, Finance Minister Nirmala Sitharaman said Tuesday.
Also, the amount involved in frauds of over Rs 1 lakh reported by scheduled commercial banks and select financial institutions to RBI has declined to Rs 6,735 crore in financial year 2018-19, from Rs 9,866 crore in 2017-18 and from Rs 25,884 crore in 2016-17, she said.
The decline in number of bad loans is a result of government’s 4Rs — strategy of recognition, resolution, recapitalisation and reforms, she said in a written reply in Rajya Sabha.
“Enabled by these steps, as per RBI data on global operations, the NPAs of scheduled commercial banks (SCBs), after reaching a peak of Rs 10,36,187 crore as on March 31, 2018, have declined by Rs 1,02,562 crore to Rs 9,33,625 crore as on March 31, 2019 (provisional data for the fiscal ended March 2019,” Sitharaman said.
During 2018-19, the maximum number of frauds, involving Rs 1 lakh and above, were reported by ICICI Bank at 374 followed by Kotak Mahindra Bank (338), HDFC Bank (273), State Bank of India (273), Axis Bank (195) and American Express Banking Corporation (190), the minister said further.
A board-approved loan policies in public sector banks, use of third party data sources for comprehensive due diligence across data sources are among steps under banking reform process that have been put in place to check frauds. Strict monitoring in cases of high-value loans, deployment of specialised monitoring agencies for loans above Rs 250 crore and online end-to-end one-time settlements platforms have been done to ensure timely and better realisation in such settlements.
“Comprehensive measures have been taken to prevent frauds including directions to banks to examine all NPA accounts above Rs 50 crore from the angle of possible fraud, initiation of criminal proceedings, enactment of Fugitive Economic Offenders Act 2018, creation of Central Fraud Registry, empowering heads of Public Sector Banks to request for issue of Look Out Circular,” she said.
Sitharaman said the SCBs effected record recovery of Rs 4,01,424 crore over the last four financial years, including record recovery of Rs 1,56,746 crore during 2018-19 ( provisional data for 2018-19, as reported by RBI on July 9, 2019). The minister also informed the Upper House that other steps under the banking reform process such as a board-approved loan policies in public sector banks, use of third party data sources for comprehensive due diligence across data sources have been put in place to check frauds.
Among others, change in credit culture with the Insolvency and Bankruptcy Code (IBC) fundamentally changing the creditor-borrower relationship, taking away control of defaulting companies, debarring wilful defaulters from taking part in resolution process as well as raising funds from markets are the steps that have been employed, minister said.
Establishment of National Financial Reporting Authority, straight-through processing between Core Banking System and SWIFT and instituting in PSBs the system of obtaining certified copies of passport of promoters /directors of companies availing of loans exceeding Rs 50 crore have been some of other measures taken for banking sector.
Separately, in a reply to a question on defaults in loan of Rs 25 crore and more in PSBs, Minister of State for Finance Anurag Singh Thakur said that as on March 31, 2019, there were 1,938 unique borrowers with funded amount outstanding of more than Rs 25 crore who had defaulted on their loans (as per RBI data).