Govt and RBI policies aid banks to recover bad loans of Rs. 8.6 lakh crore in 8 fiscal years

The administration informed Parliament that concrete actions taken by the RBI and government assisted banks in recovering bad loans of more than Rs 8.6 lakh crore over the course of the previous eight fiscal years. Non-performing assets (NPAs) are a natural, albeit unfavourable, corollary of the banking industry, according to Minister of State for Finance Bhagwat Karad in a written response to the Lok Sabha.

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KEY POINTS:

• NPA build-up is linked to a number of variables, including the current macroeconomic climate, sectoral difficulties, the global business environment, delayed stress assessment by banks, aggressive lending during upturns, inaccurate risk pricing, and inadequate credit underwriting.
• The government of India and the Reserve Bank of India (RBI) regularly issue directives and have implemented a number of initiatives aimed at resolving long-standing stressed assets on banks’ books as well as timely identification and recognition of stress immediately upon default and take corrective action for mitigating the same.
• In addition to 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 and Bankruptcy Code of 2016, these methods are also accessible to lenders for recovery and settlement (IBC).
• Scheduled Commercial Banks (SCBs) recovered Rs 8,60,369 crore from NPAs during the last eight financial years (provisional data) as a consequence of comprehensive measures implemented by the government and RBI to check the cases of NPAs and bring them down.

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