The clean banking drive has started showing result with public sector banks (PSBs) increasingly adopting prudent business approach replacing aggressive lending practices, said Financial Services Secretary Rajiv Kumar.
"The NPA crisis brought opportunity for introduction of responsible and responsive banking. All the PSBs, which have about 75 per cent market share, decided last year to adopt EASE (Enhanced Access & Service Excellence), ushering in paradigm shift in their approach," he told PTI.
"Gradually, Indian banking system is moving towards new normal that is clean banking," he said.
To deal with the twin balance sheet challenge, he said, the four Rs -- Recognition, Recapitalization, Resolution, and Reform -- were put in place.
It yielded rich dividend assisted greatly by implementation of Asset Quality Review and Insolvency and Bankruptcy Code, he said, adding the resolution process brought down non-performing assets (NPAs) by over Rs one lakh crore in the last one year.
Banks in the first quarter of 2018-19 have made a recovery of Rs 36,551 crore, registering 49 per cent growth over the year-ago period.
Highlighting other measures by the government, he said:"Bank accounts of around 2.29 lakh shell companies have been frozen. Banks are already checking for fraud in all bad loans of over Rs 50 crore.
"Passport details have been sought. Another impact is that defaulters have started approaching banks on their own as they have threat of losing control of their business."