 "bad loans")
Comprehensive measures taken by the government and Reserve Bank of india (RBI) to recover and reduce NPAs, including those pertaining to corporate companies, have enabled an aggregate recovery of Rs 10.16 trillion by Scheduled Commercial Banks (SCBs) during the last nine financial years ending 2022-23, the finance ministry said.
In reply to the question in Lok Sabha about steps taken by the finance ministry to recover the bad loans and to reduce NPA, Bhagwat Karad, minister of state in the ministry of finance said that the Insolvency and Bankruptcy Code, 2016 (IBC) has fundamentally changed the creditor-borrower relationship, taking away control of the defaulting company from promoters/owners, and debarring wilful defaulters from the resolution process.
Karad said that PSBs have created stressed asset management verticals for stringent recovery, segregated pre- and post-sanction follow-up roles for clean and effective monitoring, and engaging specialised monitoring agencies for monitoring of large-value accounts.
He said that wilful defaulters are not sanctioned any additional facilities by banks or financial institutions, and their unit is debarred from floating new ventures for five years. “Wilful defaulters and companies with wilful defaulters as promoters/directors have been debarred from accessing capital markets to raise funds,” he added.
Karad said that a prudential framework for the resolution of stressed assets was issued by RBI in 2019 to provide a framework for early recognition, reporting, and time-bound resolution of stressed assets, with a built-in incentive to lenders for early adoption of a resolution plan.
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).
