A fast-growing economy, favourable interest rate climate and improvement in asset prices are among the factors cited for the turnaround of the banking sector with regard to NPAs.
Chennai, Aug. 31
Ask bankers about non-performing assets (NPAs) now, and the consensus is that the problem is no longer there - or at worst, is well under control.
The overall ratio of gross non performing assets at 3.5 per cent of loans and net non-performing assets at 1.3 per cent of loans for the entire banking sector tend to support that optimism.
A fast-growing economy, favourable interest rate climate, improvement in asset prices, tighter laws and better implementation, are among the factors cited for the turnaround of the banking sector with regard to NPAs.
But the resolution of non-performing assets that exist on the books is not proving very easy.
3 main methods
Going by statistics provided by the Reserve Bank of India in its Annual Report, the three main methods currently in use - (1) Issuing of notice under SARFAESI Act, (2) Proceeding through the Debt Recovery Tribunal and (3) Lok Adalat do not seem to have yielded significant results.
According to the report, about 1,33,665 notices have been sent by banks to defaulting borrowers by March 2006, involving an outstanding amount of Rs 41,053 crore.
Banks recovered Rs 7,296 crore in respect of 72,178 cases. A further Rs 4,410 crore was received through 35,090 compromise proposals.
With regard to Debt Recovery Tribunals, banks have filed 71,399 cases involving Rs 1,11,293 crore.
Of this, 36,803 cases involving Rs 42,792 crore have been adjudicated. The amount recovered was Rs 14,992 crore.
As for Lok Adalat, commercial banks have filed 8,16,068 cases with Lok Adalats involving an amount of Rs 4,263 crore.
The number of cases decided was 3,07,189 involving an amount of Rs 1,574 crore. The recoveries effected in 24,0819 cases stood at Rs 649 crore.