Public sector banks have filed 2,571 FIRs and 9,363 recovery suits against wilful defaulters till September 30 this year.
Public sector banks have filed 2,571 FIRs and 9,363 recovery suits against wilful defaulters till September 30 this year. They have also initiated action in 7,616 cases of wilful defaults under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI Act), minister of state for finance Shiv Pratap Shukla informed the Rajya Sabha.
Banks have imposed penalties against erring officials responsible for bad loans. Stricter action including dismissal and compulsory retirement were taken in cases where an element of fraud was observed, the minister informed the house in a written reply to a question by members.
The country’s commercial banks hold non-performing assets (NPAs) worth Rs 10.4 lakh crore, around 11.2% of their total loans outstanding. The crisis is deeper in public sector banks, whose gross NPAs stood at Rs 9 lakh crore or 14.6% of their advances.
In the aftermath of the global financial crisis, the Reserve Bank of India had relaxed asset classification norms, which allowed commercial banks to resort to ever-greening of non-performing assets. Commercial banks did not highlight the problem till the central bank withdrew this relaxation in April 2015.
The Asset Quality Review, initiated by the then RBI governor Raghuram Rajan exposed the real magnitude of the bad loan problem. All PSU banks that had posted operating profits in the three previous years suddenly had net losses.
The government had, last month, authorised public sector bank chiefs to request look-out circulars to prevent wilful defaulters and fraudsters from fleeing the country.This follows the exit of high profile defaulters like Vijay Mallya, Nirav Modi and Mehul Choksi from the country. The government’s efforts to bring the defailters back into the country received a huge boost when a UK court rejected Vijay Mallya’s plea challenging his extradition.