The government informed Parliament on Monday that tangible actions taken by the government and RBI helped banks recover bad loans worth more than Rs 8.6 lakh crore in the last eight fiscal years.
Non-performing assets (NPAs) are a natural, albeit unfavorable, corollary of the banking industry, saidMinister of State for Finance Bhagwat Karad in a written response to the Lok Sabha.
NPA build-up is due to a number of variables, including current macroeconomic conditions, sectoral concerns, the global business environment, delayed stress recognition by banks, aggressive lending during upturns, inaccurate risk pricing, and inadequate credit underwriting, he said.
The Reserve Bank of India (RBI) and the government "regularly issue guidelines and have taken several initiatives aimed at resolution of long-standing stressed assets on the books of banks as well as timely identification and recognition of stress immediately upon default and take corrective action for mitigation of the same," Karad said.
The Recovery of Debts and Bankruptcy Act of 1993, the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act of 2002, and the Insolvency & Bankruptcy Code of 2016 (IBC) are just a few of the legal tools already available to lenders for recovery and resolution, the minister said.
"Scheduled Commercial Banks (SCBs) recovered Rs 8,60,369 crore during the last eight financial years from NPAs as a consequence of comprehensive actions taken by the government and RBI to check the cases of NPAs and bring them down," Karad said.
He said, the IBC has changed the way that credit is seen, and resolution plans have been approved under it in 480 cases up to March 2022, totaling Rs 2.34 lakh crore that can be recovered by financial creditors.