The finance ministry’s review meeting with the chief executives of public sector banks (PSBs), ahead of the Interim Budget 2019-20, will focus on ways to reduce non-performing assets (NPAs) and boost their recovery, especially by auctioning borrowers’ properties.
Financial Services Secretary Rajiv Kumar is set to chair the meeting slated to be held on January 28, instead of January 22 as was planned earlier.
“The meeting will be focussed on NPAs.
We will discuss the steps being taken by banks to reduce and recover bad loans,” a senior finance ministry official said, requesting anonymity. “The position of NPAs
and recovery made in NPA and written-off accounts” are the topmost agenda items of the meeting.
The ministry is set to take up the issue of “transparent auction of property” of borrowers whose loans have become NPA. A ministry official said banks are going slow in auctioning the properties under the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest (Sarfaesi) Act.
“Banks were supposed to auction around 50 properties under the Sarfaesi Act but they have put up only 10 for auction. We will ask banks why there has been a delay and suggest ways to expedite it as this will help in recovery of bad loans,” the ministry official said. Setting up a common portal for e-auction of properties with all the details is one of the proposals that the ministry will discuss with the PSBs.
The ministry will push banks to send more applications to debts recovery tribunals (DRTs) to ease recovery of loans. Last year, the government decided to double the pecuniary limit to Rs 20 lakh for banks to file applications with a DRT. Six new DRTs have also been established in a bid to expedite recovery.
The government will also discuss institutional improvements, including robust board governance, as one of the issues with the PSB chiefs.
In January last year, the government asked PSBs to follow a reforms agenda, known as EASE (Enhanced Access and Service Excellence), and one of the tasks included improving governance in banks. In its review meeting, the ministry may discuss the progress made by PSBs on board-led strategic vision for banks and evaluation of performance of board directors. PSBs reported recovery of bad loans worth Rs 60,713 crore in the first half of the current financial year — double the amount received during the same period last year.