PSBs Gross NPAs reduce from 9.11% to 2.58% from March 2021 to March 2025: Govt
Public Sector Banks have set-up specialized stressed assets management verticals and branches for effective monitoring and focused follow-up of NPA accounts, which facilitates quicker and improved resolution/ recoveries.
The Finance Ministry has stated that Gross non-performing assets (NPAs) of public sector banks have been declining during the last five financial years. The NPAs have reduced from 9.11% to 2.58% from March 2021 to o March 2025.
Some comprehensive measures have been taken by the Government and the Reserve Bank of India (RBI) to recover and reduce NPAs.
These measures include the following:
With the Change in credit culture has been affected, the Insolvency and Bankruptcy Code (IBC) fundamentally changing the creditor-borrower relationship, taking away control of the defaulting company from promoters/owners, and debarring wilful defaulters from the resolution process.
To make the process more stringent, personal guarantor to corporate debtor has also been brought under the ambit of IBC.
The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and the Recovery of Debt and Bankruptcy Act have been amended to make it more effective.
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The Pecuniary jurisdiction of Debt Recovery Tribunal (DRTs) was increased from Rs. 10 lakhs to Rs. 20 lakhs to enable the DRTs to focus on high value cases resulting in higher recovery for the banks and financial institutions.
Public Sector Banks have set-up specialized stressed assets management verticals and branches for effective monitoring and focused follow-up of NPA accounts, which facilitates quicker and improved resolution/ recoveries.
Moreover, the Deployment of Business correspondents along with the adoption of Feet-on-street model have also boosted the recovery trajectory of NPAs in banks.
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RBI master circular on Income Recognition, Asset Classification and Provisioning (IRAC) norms dated July 1, 2015 has stated that collateral such as immovable properties charged in favour of the bank should be valued once in three years by empanelled valuers.
Further, Joint Lenders Forum (JLF) guidelines, issued by RBI in February 2014 encourage the banks to seek explanation from valuers who overstate security value and reporting their names to Indian Banks Association (IBA).
Read Also : PSBs Gross NPAs reduce from 9.11% to 2.58% from March 2021 to March 2025: Govt