"Banks have been told to step up the recovery process. The finance minister has already directed that banks should not write off more than what they recover," said a finance ministry official on condition of anonymity. State-run banks have written off loans worth more than Rs 60,000 crore in the last three years, according to government data.
The central bank and the government have long made it clear that they want banks to crack down on such debt and serial defaulters. RBI has proposed draft rules that promise a more stringent regime on bad loans and how they should be restructured.
"This is one section where banks are also not focusing. We now expect them to take charge through legal processes and debt recovery tribunals (DRTs)," the official said. While the ministry has been pushing banks to recover assets, this has met with little success. In April-June, recoveries by state-run banks amounted to a mere Rs 1,416 crore while they added more than double the amount as bad loans, according to finance ministry data. The ministry wants banks to take proactive action on nonperforming loans and avoid the kind of situation that United Bank of India finds itself in.
The Kolkata-based bank, which posted a loss of Rs 489 crore in the second quarter, is under RBI scrutiny, which has barred it from restructuring debt and sanctioning loans of more than Rs 10 crore to any single borrower. The loan book of state-run Allahabad Bank is also being inspected by RBI.
 |
There is no reason to panic, said the finance ministry official cited above. "We will wait for the RBI report," he said. "If there are regulatory issues, they will be dealt with strictly."
In October, after a review meeting with bankers, finance minister P Chidambaram had asked lenders to set up separate verticals to recover money from accounts that had been written off. "Special due diligence needs to be done by banks on promoters, where there are cases of loss assets. It needs to be ascertained that it should not be a wilful default and if it is, then action should be taken," said Mukesh Mohan, an independent director with Dena Bank.Bankers, however, feel that defining recovery limits may not be a good idea. "Banks alone cannot recover loans. If you look at the three recovery channels, the banks have recovered more through the Sarfaesi (Securitisation and Reconstruction of Financial Assets and Enforcement of Securities) Act than through Lok Adalats or DRTs," said a senior Bank of India official. The bank recovered around Rs 2,000 crore from loss assets as of March 2013.
In June, PSU banks had gross NPAs of Rs 1.92 lakh crore, which was 3.99% of gross advances, up from Rs 1.64 lakh crore in March.
Copyright © 2013 Times Internet Limited. All rights reserved.
via Business - Google News http://news.google.com/news/url?sa=t&fd=R&usg=AFQjCNGWs1qWLvGhSDhi7aTBol7cjiQzuQ&url=http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/banking/recover-at-least-10-of-bad-loans-finance-ministry-to-banks/articleshow/27761895.cms
Put the internet to work for you.
0 comments:
Post a Comment