PSU banks confiscate property worth Rs 2.3 lakh crore from loan defaulters; record recovery last year

Borrowers who are laid back after taking loans from the banks should now be alerted as the lenders have fastened the process of confiscating property in the case of NPAs. The agencies have seized the property of over Rs 2.3 lakh crore from the NPA accounts in the last three financial years. “The accounts have been taken over or confiscated through Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002, Debts Recovery Tribunals (DRTs), and National Company Law Tribunal (NCLT),” said Anurag Singh Thakur, MoS, Ministry of Finance in a reply to a question in Lok Sabha. 

The PSU banks have also recovered Rs 3.35 lakh crore over the last four-and-a-half financial years, including a record recovery of Rs 1.27 lakh crore during the financial year 2018-19, said the minister. 

The banks-especially the PSU banks-in India have been struggling with the burden of NPAs, touching as high as Rs 10 lakh crore. This has also reduced the banks’ capacity to lend and make profits. On top of it, the compensation to these losses are also done by the banks in the form of provisioning, which marks an additional dent to the banks’ operating profits. Recovery of these bad loans is likely to leave more cash with banks, boosting their businesses.   

The reply said that the government has implemented a comprehensive 4R’s strategy, consisting of recognition of NPAs transparently. Under the 4R’s, change in credit culture has been practised; the SARFAESI Act, 2002 has been amended to make it more effective, with provision for three months’ imprisonment in case the borrower does not provide asset details; suits for recovery of dues are also filed by banks before DRTs; and the recapitalisation of PSU banks with Rs 3.89 lakh crore.

Damage to the accounts of banks adversely affects the credit outflow to the major industries, including MSMEs, which are the backbone of the economy. The quick recovery of collaterals from the NPA accounts may not only strengthen the lending capacity of the banks but also create fear among wilful defaulters as well.