Banks recovered over ₹10 trillion bad debt in past 9 years: FinMin
₹10 trillion of bad debt, the finance ministry informed Parliament, quoting provisional data for FY2022-23. Minister of state for finance Bhagwat Karad said in a reply in the lower house that various legislative and institutional mechanisms have played a key role in cleansing banks' balance sheets.
He credited the 2016 Insolvency and Bankruptcy Code, the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act's amendments, and the establishment of the National Asset Reconstruction Company Limited, among other measures. Karad also emphasized the importance of the Central Repository of Information on Large Credits (CRILC) database system, which gathers, stores, and circulates credit data to lenders.
He noted the role of comprehensive and automated early warning systems in public sector banks, and mentioned that wilful defaulters and their businesses are now barred from acquiring further capital market funds and launching new ventures for five years. The minister also underlined the RBI's 2019 Prudential Framework for Resolution of Stressed Assets in alleviating banking sector stress, as it incentivizes lenders to adopt resolution plans promptly.
As of March 31, 2023, CRILC data indicated total outstanding loans of ₹1.03 trillion classified as NPAs from corporate borrowers of scheduled commercial banks. The RBI doesn't maintain records of total loan amounts recovered from corporate borrowers identified as NPAs, according to the minister.
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