Going by the Economic Survey 2003-04, it seems that the recovery management programmes like corporate debt restructuring (CDR), recovery through civil courts and debt recovery tribunals (DRTs) and the Securitisation Act have finally started yielding results. Net NPAs as percentage of net advances and total assets have declined over the last three years. In fact, going by the data revealed in the Survey, the recovery management programmes have been more effective in the public sector banks as compared to the private sector and foreign banks. However, banks are far from satisfied with their recovery management programmes. There has been instances where corporates, who have been served notice under the Securitisation Act, have taken recourse to legal process and delayed the recovery process of banks. Banks have further mooted for more teeth to the Securitisation Act. In fact, bankers have time and again made it clear that the Securitisation Act is effective only for small defaulters while the big fish continue undettered. The Survey is silent on the efficacy of the recovery mechanism but points out that there has been a sharp decline in the gross NPAs from Rs 70,861 crore in 2001-02 to Rs 68,715 crore in 2002-03. Net NPAs too declined from Rs 35,554 crore to Rs 32, 764 crore during the same period. While net NPAs as percentage of net advances declined from 5.5 per cent in 2001-02 to 4.4 per cent in 2002-03, net NPAs as percentage of total assets also declined from 2.3 per cent in 2001-02 to 1.9 per cent in 2002-03. The fall in these numbers are more marked for the public sector banks. While net NPAs as percentage of net advances for the public sector banks fell from 5.8 per cent in 2001-02 to 4.5 per cent in 2002-03, in case of private sector banks it fell from 5.7 per cent to 5 per cent while in the case of of the foreign banks it went down from 1.9 per cent to just 1.8 per cent. Similarly net NPAs as percentage of total assets for the public sector banks fell from 2.4 per cent in 2001-02 to 1.9 per cent in 2002-03. In case of the private sector banks this ratio fell from 2.5 per cent to 2.3 per cent and in the case of the foreign banks this ratio remained stagnant at 0.8 per cent for the last three years (2000-01 to 2002-03). The Survey also observed that analysis of NPAs sector-wise showed that bulk of the NPAs in case of both public and private sector banks came from the non-priority sectors. While in PSU banks this ratio stood at 50.7 per cent, in private sector banks it was 78.6 per cent.
