Bad loan recovery by SCBs down 25.97 per cent to Rs 22,800 cr in FY16

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Mumbai, December 30
Bad loan recovery by scheduled commercial banks (SCBs) fell by 25.97 percent to Rs 22,800 cr in FY16 as compared with Rs 30,800 crore recovered in the previous year. Though banks have been making serious efforts to reduce their non-performing assets through various legal channels, The legal channels that banks resort to for reducing NPAs include Lok Adalats, Debt Recovery Tribunals (DRTs) and invocation of SARFAESI (Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act). Public sector banks (PSBs), which are burdened with a high proportion of the banking sector’s NPAs, could recover only Rs 19,757 crore, compared to Rs 27,849 crore in the previous year, RBI report said.
The deceleration in recovery by SCBs was mainly due to 52 per cent reduction in recovery through the SARFAESI channel, to Rs 13,200 crore in 2015-16 from Rs 25,600 crore in 2014-15.
However, recovery through Lok Adalats soared 220 per cent year-on-year to Rs 3,200 crore as against Rs 1000 crores Recovery via DRTs jumped 51 per cent year-on-year basis to Rs 63.65 crore as against Rs 42 crore in the pervious year. The number of cases referred to these three legal channels cumulatively was up 47.5 per cent at 46,54,753 as against 31,55,672 in the previous year. Banks also reduced their stressed assets by selling them to asset reconstruction companies (ARCs). This has been increasing since March 2014 because of the regulatory support extended to banks under the Framework to Revitalise the Distressed Assets in the Economy.
In FY16, 16 ARCs acquired stressed assets amounting to Rs 72,626 crore from banks, compared with 14 ARCs acquiring Rs 58,479 crore in the previous year.

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