Banks recover over Rs 10 lakh crore in last nine years

  • July 27, 2023
  • Posted by: OptimizeIAS Team
  • Category: DPN Topics
No Comments

 

 

Banks recover over Rs 10 lakh crore in last nine years

Subject: Economy

Section: Monetary Policy

In News: Banks have undertaken an aggregate recovery of Rs 10 Lakh crore during the last nine years through measures taken to recover and reduce non-performing assets, the finance ministry has stated in Parliament.

Key Points:

  • Comprehensive measures taken by the Government and RBI to recover and  to reduce NPAs, including those pertaining to corporate companies, has enabled  an aggregate recovery of Rs. 10 Lakh crore by Scheduled Commercial banks (SCBs) during the last nine financial years.
  • Measures include changes in Insolvency and Bankruptcy Code, Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI), setting up of National Asset Reconstruction Company Limited and creation of stressed asset management verticals by SCBs.
  • In addition RBI’s 2019 issued Prudential Framework for Resolution of Stressed Assets has helped provide a framework for early recognition, reporting and time-bound resolution of stressed assets, with a build-in incentive to lenders for early adoption of a resolution plan.
  • As per the Central Repository of Information on Large Credits (CRILC) data, the total funded – amount outstanding of SCBs to corporate company borrowers, classified as non-performing assets (NPA)  and having amount outstanding of Rs 1,000 crore or more was Rs 1,03,975 crore as on March 31, 2023.
Central Repository of Information on Large Credits (CRILC) 

  • RBI constituted a Central Repository of Information on Large Credits (CRILC) to collect, store, and publish data on all borrowers’ credit exposures. Banks/Financial Institutions are expected to report findings to CRILC.
  • Banks have to provide credit information to CRILC about their borrowers with an aggregate fund-based and non-fund based exposure of and over Rs.5 Crores
  • CRILC collects, stores and disseminates credit data to lenders, and banks are required to submit report on a weekly basis to CRILC, in case of any default by borrowing entities with exposure of Rs 5 crore and above.

National Asset Reconstruction Company Limited

  • National Asset Reconstruction Company Limited was set up as an asset reconstruction company (Bad bank) with an aim to resolve stressed assets above Rs 500 crore each.
  • Government has also approved extending a guarantee of up to Rs 30,600 crore to back Security Receipts issued by NARCL to lending institutions for acquiring stressed loan assets
Banks recover over Rs 10 lakh crore in last nine years economy