New Delhi: Public sector banks have taken loan recovery action under Sarfaesi law against 5,954 wilful defaulters owing about Rs 70,000 crore to the lenders.
At the end of March 31, 2017, 21 banks together have taken action against 5,954 wilful defaulter under Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (Sarfaesi) Act, as per data collated by the Finance Ministry.
The country's largest lender SBI has taken action against 1,444 such defaulters with outstanding loan of Rs 20,943 crore.
Remaining 20 banks have taken action against 4,510 wilful defaulters with outstanding loan of Rs 48,496 crore.
Total outstanding loans due to public sector banks by wilful defaulters amounted to Rs 92,376 crore, according to the finance ministry data.
The total outstanding loans by wilful defaulters rose to Rs 92,376 crore at the end of financial year 2016-17, from Rs 76,685 crore at the end of fiscal 2015-16 – up 20.4 per cent.
At the same time, there has been close to 10 per cent increase in the number of wilful defaulters on annual basis.
It increased to 8,915 at the end of March as against 8,167 in the previous fiscal.
Out of 8,915 cases of wilful defaults, banks have filed FIR (first information report) in 1,914 cases with outstanding loans of Rs 32,484 crore.
During 2016-17, 27 public sector banks, including State Bank of India and its five associates, had written off Rs 81,683 crore, the highest in the last five fiscals. The amount was 41 per cent higher than that in the previous fiscal.
Gross Non-performing assets of the public sector banks rose to Rs 6.41 lakh crore at the end of March 2017 as against Rs 5.02 lakh crore a year ago.
In order to check incidences of wilful default, RBI has tightened the norms and made it clear that promoter of the defaulting company cannot escape from his responsibility even if he is not a whole-time director.
As per earlier guidelines, a bank couldn't label a non- whole-time director of a company as a wilful defaulter unless there was conclusive evidence that the individual was aware of the wilful default by the company and had not objected to it.
A wilful default occurs when a borrower does not honour an obligation despite having the capacity to pay or siphons off funds by disposing of assets without the knowledge of the bank, according to Reserve Bank of India.
Reserve Bank of India has allowed banks to name and shame wilful defaulters by publishing their photographs.
'Finance ministry ready to provide capital support for PSU banks' consolidation'
New Delhi: The finance ministry is open to providing capital support for facilitating consolidation among state-owned banks, which are reeling under mounting bad loans, official sources said.
The Union cabinet has approved the setting up of an alternative mechanism, or a panel of ministers, to decide on consolidation proposals for state-run banks.
On receiving a proposal from stressed banks, if the ministerial panel finds that the merger is going to create a strong bank, it will not let it go for want of fund shortage, the sources said, adding that acquisition will come at a cost.
"First, the merger proposal should come from the board," said a source, who did not want to be named.
"If the Alternative Mechanism finds the match viable, the finance ministry could provide capital support to the acquiring bank if there is a shortfall," he said.
Sources said the government is keen that at least one merger proposal reaches a logical conclusion by the end of the current fiscal, which is next March-end.
Finance Minister Arun Jaitley, after the Cabinet decision last week, had said that the government has not set any target for consolidation. There are now 20 public sector banks (PSBs) other than SBI. These state-owned banks are grappling with Rs 6 lakh crore worth of non-performing assets (NPAs) or bad loans, which is about 75 per cent of the total distress. After in-principle approval for consolidation, the banks would take steps in accordance with the law and Sebi requirements. The final scheme will be approved by the Cabinet. An official source said: "It is not necessary that a larger public sector bank should overtake a small or mid-size lender. If there is synergy, two or three banks can merge to create a bigger and stronger entity so that the dependence on public exchequer is minimised."
Earlier this year, the government had approved the merger of SBI's five associate banks with itself. In March, the Cabinet also approved the merger of Bharatiya Mahila Bank (BMB) with SBI.
Five associates and BMB became part of SBI on April 1, 2017, catapulting the country s largest lender to among the top 50 banks in the world. State Bank of Bikaner and Jaipur (SBBJ), State Bank of Hyderabad (SBH), State Bank of Mysore (SBM), State Bank of Patiala (SBP) and State Bank of Travancore (SBT), besides BMB, were merged with SBI.
With the merger, the total customer base of the SBI reached around 37 crore with a branch network of around 24,000 and nearly 59,000 ATMs across the country. The merged entity began operation with deposit base of more than Rs 26 lakh crore and advances level of Rs 18.50 lakh crore. ptiGovt notifies changes in Banking Regulation Act
Govt notifies changes in Banking Regulation Act
New Delhi: The government has notified the Banking Regulation (Amendment) Act under which it can authorise the RBI to issue directions to banks to initiate insolvency resolution process to recover bad loans. The banking sector is saddled with NPAs of over Rs 8 lakh crore, of which Rs 6 lakh crore is with PSBs. Earlier this month, Parliament had approved the Act, which replaced an ordinance in this regard. The government in May had promulgated an ordinance authorising the Reserve Bank of India (RBI) to issue directions to banks to initiate insolvency resolution process under the Insolvency and Bankruptcy Code, 2016.
Following the ordinance, the RBI had identified 12 accounts each having more than Rs 5,000 crore of outstanding loans and accounting for 25 per cent of total NPAs of banks for immediate referral for resolution under the bankruptcy law. The loan defaulters identified by the RBI include, Essar Steel, Bhushan Steel, ABG Shipyard, Electrosteel and Alok Industries. Under the Banking Regulation (Amendment) Act, 2017, the RBI can issue directions to banks for resolution of stressed assets. The RBI can specify authorities or committees to advise banks on resolution of stressed assets. The members will be appointed or approved by the RBI. The bulk of the NPAs are in sectors such as power, steel, road infrastructure and textiles.