New Delhi, Dec 24: Land Ceiling Acts in various states are coming in the way of banks' efforts to reduce their non-performing assets by recovering money from sale of properties mortgaged by defaulting companies. Another major hurdle is the high stamp duty on transfer of land ownership."Recoveries in NPAs is directly linked to a good property market and industrial growth. Collateral securities are available in most of the NPA accounts. In such cases, settlement can take place by selling off the mortgaged properties," PNB Housing Finance managing director R Nambirajan said.
The Land Ceiling Act is still in force in many states and the properties of large borrowers fall under the Act. The government should exempt such properties from this ceiling to help recovery of bad loans, he said adding that reduction of stamp duty is also necessary in this regard.
Stamp duty varies in different states. It is as high as 15.5 per cent in Haryana, 10 per cent in Uttar Pradesh, 8 per cent in Delhi and Mumbai and 13 per cent in Andhra Pradesh, he said.
Growing level of NPAs is a major concern in the banking sector. Only one out of 27 the nationalised banks, Corporation Bank, has been able to reduce its net NPA below the recommended level of three per cent of their net advances.
The Narasimham committee had recommended banks to reduce their net NPAs to three per cent by March 2000 and to zero by March 2002. The committee had recommended a reduction of gross NPAs to 5 per cent by March 2000, which was to be reduced further to 3 per cent by 2002.
Only four out of 27 public sector banks have been able to contain their net NPAs at less than 5 per cent of their net advances.
As per published figures in the balance sheet as on March 31, 2000 net NPAs of four banks were: Corporation Bank (1.92 per cent), Syndicate Bank (3.17 per cent), Andhra Bank (3.47 oer cent) and Oriental Bank of Commerce (3.8 per cent).
The net NPAs of other five public sector banks have crossed the alarming level of 10 per cent by the end of March, 2000. These banks are Indian Bank (net NPA 16.18 per cent), Dena Bank (13.47 per cent), United Bank of India (12.70), Allahabad Bank (12.24) and State Bank of Bikaner & Jaipur (10.14).
The average net NPA to net advances of public sector banks has, however, reduced to 7.97 per cent on March 31, 2000 from 8.84 per cent on March 31, 1999. The decline in NPAs has been attributed to the better recovery in the last fiscal.
The gross NPAs of 27 public sector banks was Rs 52,595 crore by the end of March 2000, which was 15 per cent of the gross advances. The gross NPA on March 31, 1999 was Rs 49,404 crore.
Copyright © 2000 Indian Express Newspapers (Bombay) Ltd.
