Tight steps taken by the Reserve Bank of India (RBI)  and government helped banks recover bad loans worth over Rs 8.6 lakh cr in the last 8 financial years, the government informed Parliament on Monday. Minister of State for Finance Bhagwat Karad in a written reply to the Lok Sabha said the occurrence of non-performing assets (NPAs) is normal, although an undesirable, corollary to the business of banking.

Several factors (including prevailing macroeconomic conditions, sectoral issues, global business environment, delayed recognition of stress by banks, aggressive lending during upturns, improper risk pricing and poor credit underwriting) are attributed towards NPA build-up, he said. "Government and RBI 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.

These measures complement the statutory provisions already available to lenders for recovery and resolution, including, the Recovery of Debts and Bankruptcy Act, 1993, Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and Insolvency & Bankruptcy Code, 2016 (IBC), the minister said. "As a result of comprehensive steps taken by the government and RBI to check the cases of NPAs and bring them down, scheduled commercial banks (SCBs) recovered Rs 8,60,369 crore over the last eight financial years (provisional data) from NPAs," Karad said.

Besides, the Central Repository of Information on Large Credits (CRILC) has been set up by the RBI to collect, store and disseminate credit data to lenders, and banks are required to submit reports on a weekly basis to CRILC in case of any default.

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