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Sarbajeet K. Sen

NEW DELHI, June 30

THE Reserve Bank of India devised one-time settlement (OTS) schemes are turning out to be major flop shows. Latest figures available with the Government and the RBI on the public sector banks' (PSBs) performance on the OTS front shows that while the `powerful' big borrowers merrily continue cocking a snook at the banks, the smaller and the less influential ones too are steadfastly refusing to fall into the trap laid down for them.

Details of the four categories of OTS schemes listed out in a consolidated form in a paper available with the authorities shows that the only moderately successful scheme to be the banks' own negotiated settlement efforts, with the three other RBI/Government schemes hardly evoking any response from the target categories. The three other schemes are the one for non-performing assets (NPAs) up to Rs 10 crore, for NPAs of loans up to Rs 50,000 for small and marginal farmers and the scheme for small loans with limit up to Rs 25,000.

The biggest failure of the banks on this count is on account of the big defaulters - of loans of up to Rs 10 crore - with PSBs making recoveries of merely Rs 168 crore under 31,000 accounts till March 31, 2003, against aggregate NPAs under this category of Rs 22,355 crore under 40.70 lakh accounts amounting to nearly a third of the PSBs' bad debts. Moreover, banks had collectively receiving merely 53,000 applications for settlement till March end involving Rs 519 crore, with settlements having been approved in 34,000 accounts involving Rs 335 crore.

With these figures in hand little wonder that the RBI recently announced the extension of the scheme till December 31, 2003, against the earlier deadline of October 31, for disposal of the applications. The deadline for receipt of the applications was also extended from April 30 to September 30.

For the OTS scheme of up to Rs 50,000 which came to an end on March 31, 2003 after being in force for a full year, total recoveries stood at Rs 61 crore under 68,000 accounts against aggregate defaults of Rs 1,364 crore under 14.36 lakh eligible accounts. The total applications received are 97,000 involving Rs 90 crore defaults while settlement has been approved in 76,000 cases involving Rs 79 crore.

Under the OTS scheme for small loans of up to Rs 25,000 that came to an end on June 2002, the recoveries effected stand at Rs 157 crore from 26,000 accounts against 35.98 lakh eligible accounts involving defaults of Rs 239 crore. Settlements have been approved for 2.88 lakh accounts involving Rs 199 crore against 2.95 lakh application aggregating Rs 207 crore NPAs.

As against the above schemes, the success rate of the individual settlement scheme prepared by the banks themselves have yielded much greater results. Thus, on an industry-level while banks have received 1.96 lakh applications for settlement during 2002-03, with aggregate defaults of Rs 4,036 crore, recoveries effected stand at Rs 1,583 crore under 1.62 lakh accounts. Banks have approved settlements in 1.84 lakh applicant accounts with total NPAs of Rs 3,331 crore.

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