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Money & Banking - Non-Performing Assets

'No velvet glove to big defaulters'

Our Bureau

New Delhi , April 28

THE Finance Minister, Mr P. Chidambaram, on Thursday said that he expected higher recoveries of non-performing assets by public sector banks in the coming months on account of the strengthening of the Securitisation Act.

"The strengthening of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, after certain amendments has further tightened the grip over defaulters. I would like to submit that in the next few months we are likely to recover more of our outstanding non-performing assets through this legal respite," Mr Chidambaram said in a statement, in response to a short discussion in the Lok Sabha on a calling attention notice given by the CPI member, Mr Gurudas Dasgupta, on non-performing assets of banks.

The Minister said that it was not possible to disclose the names of defaulters till legal action was initiated against them, especially when discussions are on between the borrower and the lender on recovery. He, however, ruled out any sympathetic treatment to big borrowers.

Mr Dasgupta had said that the list of wilful defaulters should be made public. He said that corporate delinquency was a major drag on the profitability of PSU banks.

Mr Chidambaram agreed that the recovery efforts of banks had been eclipsed by the fact that big industrial companies and borrowers had been the top defaulters. "An amount of Rs 3,908 crore has been outstanding against top 10 companies. The Government is concerned about this and has clearly spelt out ways to tackle wilful defaulters," he said.

However, he said that PSU banks had shown an overall improvement on the NPA front. Gross NPAs, which stood at Rs 56,473 crore as on March 2002, came down to Rs 51,538 crore on March 2004. The net NPAs came down from Rs 27,958 crore to Rs 18,860 crore for the corresponding period. The percentage of net NPAs to net advances also came down from 5.82 per cent to three per cent during the period.

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