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Mr Sinha stated that in absolute numbers, the NPAs might appear to be going up but the percentage of the NPAs to total advances has been consistently going down ever since "we started monitoring from 1993-94.

NEW DELHI, March 22

THE Lok Sabha was informed that even as the Finance Ministry does not fix any target for recovery of non-performing assets (NPAs) of financial institutions and banks from defaulting loanees as this depends on "several factors," the emphasis is on recovery.

Responding to a flurry of supplementaries on the concerns voiced by members on a query put by the BJP member, Mr A. Narendra, during question hour on Friday, the Union Finance Minister, Mr Yashwant Sinha, said that recovery of NPAs amounted to Rs 13,650 crore during 2001, which "exceeded the performance of all previous years." He said the recovery was effected through "upgradation, compromise and cash recovery, the latter alone fetched Rs 6,196 crore last year."

Mr Sinha stated that in absolute numbers, the NPAs might appear to be going up but the percentage of the NPAs to total advances has been consistently going down ever since "we started monitoring from 1993-94. He said that to reduce NPAs, several steps were in place including strengthening the debt recovery tribunals (DRTs) and appellate authority and enforcement of settlements.

Mr Sinha said that challenge to the constitutional validity of the DRTs filed in the Supreme Court has been decided in favour of the Government on March 14, and DRTs are now "out of the woods." He said that the approach of DRTs would be that defaulting loanees must be taken to court and there was also one-time settlement of small loanees of Rs 25,000 to Rs 50,000 including loans disbursed to farmers.

Mr Sinha said that he personally takes up review meeting with the chairmen of banks every six months on NPAs and they have been directed to monitor all NPAs above Rs 5 crore.

Giving the break-up of NPAs, the Minister said that up to Rs 25,000, the NPAs constitute 8.54 per cent, between Rs 25,000 and Rs 1 lakh, it is 10.56 per cent, between Rs 1 lakh and Rs 5 lakh, NPAs constitute 8.46 per cent, between Rs 5 lakh and Rs 10 lakh, it is 3.9 per cent and between Rs 10 lakh and Rs 1 crore, NPAs constitute 13.19 per cent. He said that overall, NPAs within Rs 1 crore constitute some 49 per cent of total NPAs.

To a specific query as to whether large industrial houses had huge NPAs, Mr Sinha said that above Rs 100 crore, the NPAs constitute 2.37 per cent only. Among the category of borrowers, agriculture accounts for 14.77 per cent of the net NPAs, small-scale industries 18.41 per cent and other industries in the priority sector, the net NPAs constitute 12.24 per cent, taking the overall NPAs in priority sector lending of the banks to 45 per cent.

When Congress member, Mr Ramesh Chennithala, referred to the deteriorating credit-deposit ratio in certain States such as Kerala and the impact it has on social obligation of banks, the Minister said that social obligation in the form of priority sector lending by banks is being continuously reviewed.

Mr Sinha said that "we have been putting pressure" on the three weak banks - UCO Bank, United Bank of India and Indian Bank - to improve performance and out of these, two banks, UCO Bank and United Bank of India, have improved their performance including capital adequacy ratio and it is only the Indian Bank which continues to have a negative capital adequacy ratio.

That is why in the Budget 2002-03 he provided Rs 1,300 crore for Indian Bank.

Mr Sinha said that the nationalised banks and financial institutions are taking several steps to improve their functioning and profitability.

These include reduction in their operating costs through rationalisation of branch network, abolition of zonal offices, rightsizing through voluntary retirement scheme, accessing low deposits, increasing productivity and reduction in non-performing assets.

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