Banks' NPAs in large industry, services fall 31% in over two years to Rs 4.36 lakh crore

"As per Reserve Bank of India (RBI) data on domestic operations, NPAs of scheduled commercial banks pertaining to large industry and services have come down to Rs 4,36,492 crore as on June 30, 2020 (provisional) from Rs 6,35,971 crore as on March 31, 2018, registering a decline of 31 percent," Thakur said in a written reply to the Lok Sabha.

Banks' non-performing assets in large industry and services declined 31 percent in over two years to about Rs 4.36 lakh crore in June this year, Parliament was informed on Monday.

On whether the non-performing assets (NPAs) of big industries and corporate houses have increased sharply as compared to small businesses due to non-repayment of loans to banks during the last three years, Minister of State for Finance Anurag Singh Thakur replied in negative.

"As per Reserve Bank of India (RBI) data on domestic operations, NPAs of scheduled commercial banks pertaining to large industry and services have come down to Rs 4,36,492 crore as on June 30, 2020 (provisional) from Rs 6,35,971 crore as on March 31, 2018, registering a decline of 31 percent," Thakur said in a written reply to the Lok Sabha.

He said a number of steps have been taken for recovery of loans from the corporate houses, which enabled the banks to recover Rs 5,48,749 crore during the last five financial years.

This included a record recovery of Rs 1,56,692 crore during 2018-19, the largest proportion of which was on account of recoveries made in NPAs of large industry and services.

On the measures taken by the government to promote the micro, small and medium enterprises (MSME) sector, Thakur said the RBI has permitted banks and NBFCs to restructure GST registered standard MSME accounts with exposure of up to Rs 25 crore, without downgrading them as NPA among others.

Under this, the public sector banks (PSBs) have restructured over 6.51 lakh MSME accounts till March 2020, he said.

Also, the government has revised the definition of MSME units to allow more enterprises to avail the benefits and removed ceiling on credit for loans to MSMEs in the services sector.

Besides, the Reserve Bank of India (RBI) has mandated banks to not accept collateral security in case of loans up to Rs 10 lakh to the micro and small enterprises, among others.

The minister said various steps have also been taken to provide relief during the pandemic to these units, including the launch of pre-approved loans under emergency credit line guarantee scheme, relief to banks in their cash reserve ratio requirement from February to July 2020 for incentivising lending to MSMEs, automobiles and residential housing, among others.

In a separate question on bad loans from domestic operations of the public sector banks (PSBs) that were generated in five specific categories, the minister said the NPAs from these categories stood at over Rs 6.44 lakh crore by end of March 2020.

As per data reported by the RBI for domestic operations, data on bank-wise and category-wise NPAs of PSBs from loans granted to 'agriculture and allied activities', 'industry', 'retail loans-education', 'retail loans - housing', and 'other categories' stood at Rs 6,44,417 crore as on March 31, 2020, Thakur said in a written reply.

"RBI has apprised that data on 'business' and 'personal loan' categories are not collected and maintained by it," Thakur said.

Among these five categories, the highest non-performing assets (NPAs) or bad loans in the 'industrial' sector stood at Rs 3,33,143 crore, followed by 'other categories' loan at Rs 1,77,275 crore, 'agriculture and allied activities' Rs 1,11,328 crore, 'housing loan' Rs 17,045 crore and 'education loan' at Rs 5,626 crore.

On whether the government has any data of businessmen including those who migrated to other countries after obtaining loan fraudulently, Thakur said: "Central Bureau of Investigation (CBI) has apprised that 38 persons involved in the cases registered by CBI related to financial irregularities with banks fled the country during January 2015 to December 2019".

Action is taken as per the law in all such cases, he said.

The Enforcement Directorate has apprised that under the Prevention of Money Laundering Act, 2002 application for Red Corner Notice were filed against 20 persons, extradition requests were sent in respect of 14 persons to various countries, and applications under Fugitive Economic Offenders Act, 2018 were filed against 11 persons, the minister informed without citing names.

Besides, a number of policy measures have been taken for deterring, preventing and taking effective action against business persons fraudulently obtaining loans and fleeing the country, Thakur said.

The enactment of the Fugitive Economic Offenders Act, 2018 provides for attaching the property of the fugitive economic offender, confiscation of property and disentitling from defending any civil claim.

"Further, government has advised PSBs to obtain a certified copy of the passport of the promoters/directors and other authorised signatories of companies availing of loan facilities of more than Rs 50 crore. Heads of PSBs have been empowered to issue requests of look-out circulars," the minister said.