NEW DELHI: While bad loans of nationalised banks jumped up over the last few years, their recovery has been miniscule - just about 4%. According to data put out by the Reserve Bank of India on the recovery of non-performing assets (NPAs) through various channels, just about Rs 28,000 crore could be realised in 2016-17, Rs 22,800 crore in 2015-16 and Rs 30,800 crore in the 2014-15.
In contrast, gross NPAs of banks rose from Rs 7.11 lakh crore in March, 2017 to Rs 8.40 lakh crore in September, 2017. For recovery of bad loans, NPA cases are referred to Lok Adalats and the Debt Recovery Tribunal. Also, the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI) comes into play. SARFAESI promotes the setting up of asset reconstruction and asset securitisation companies to deal with NPAs accumulated with the banks and financial institutions.
The Sarfaesi Act of 2002 was amended in 2016 as it took banks too much time to recover the bad loans.
In all, 22,61,873 NPA cases were referred to Lok Adalats, debt recovery tribunal and SARFAESI for recovery in 2016-17. All these cases put together were worth Rs 2,86,000 crore. Of them, just Rs 28,000 crore could be recovered.
Similarly, in 2015-16, as many as 46,54,753 cases involving a total of Rs 2,21,400 crore went to the debt recovery bodies, but the mop up was Rs 22,800 crore.
Most of the bad loans cases went to the Lok Adalat, which is a mechanism to settle matters out of court. While Lok Adalats have no judicial powers, they offer a platform for the bank and the borrower to meet and arrive at a mutual settlement. According to experts, Lok Adalats are effective for recovery of small loans.
The Debt Recovery Tribunals (DRTs) help banks and financial institutions recover their dues quickly without the hassle of lengthy civil court proceedings. While bigger cities, including New Delhi, Chennai, Kolkata and Mumbai, have three tribunals, cities like Ahmedabad and Chandigarh have two. Currently, 38 DRTs and 5 DRATs are working in the country.