The finance ministry has asked state-run banks (PSBs) to step up the auction of mortgaged properties of defaulters and improve recovery from bad loans, an official source told FE. This is part of the broader effort by the lenders to boost their overall recovery from non-performing assets (NPAs).
The lenders have been asked to make greater use of a common portal set up to facilitate the e-auction of these mortgaged properties. The portal — Indian Banks Auctions Properties Information (IBAPI) — was an initiative of the Indian Banks’ Association and originally developed by Allahabad Bank (later amalgamated with Indian Bank).
The portal is integrated with state-run e-auction platform MSTC.
According to latest data, more than 17,000 properties mortgaged with 11 state-run banks (barring Punjab and Sind Bank) are listed on this portal for sale. Of these, as many as 13,206 are residential properties, while the rest are commercial (2,489), industrial (1,347) and agricultural (102) properties. Over the next 30 days, as many as 3,146 residential, 637 commercial and 347 industrial properties will be put up for sale by the lenders.
Recently, the department of financial services held a meeting with the officials heading the recovery verticals in public sector banks to review the progress on the e-auctioning of properties, and took stock of the utilisation of the portal during the June quarter.
“There were certain technical issues relating to the portal that had cropped up. These are being fixed urgently,” said an official.
A panel comprising senior officials from Indian Bank, MSTC, Bank of Baroda, Canara Bank, Union Bank of India and Bank of Maharashtra has been set up to hold detailed deliberations among the state-run lenders and expedite resolution of issues, said a senior banker.
Recovery efforts by banks, especially state-run ones, surged after a massive spike in their NPAs was reported, following a comprehensive review of their asset quality by the central bank in December 2015. Banks’ gross NPAs jumped from Rs 3.2 trillion as of March 2015 to Rs 10.4 trillion by March 2018, with PSBs accounting for most of the bad loans.
The recovery by state-run banks, through various mechanisms, picked up steadily before the pandemic somewhat slowed down the process in FY21. PSBs recovered about `5.5 trillion from bad loans over seven years through FY21.
The recovery, as a percentage of gross the NPAs at the beginning of the financial year, improved from 11.33% in FY18, to 13.52% in FY19 and to 14.69% in FY20. In FY21, it eased to 12.28%, as the pandemic hit the process, according to a reply by minister of state for finance Bhagwat Karad in the Lok Sabha.