The Department of Financial Services (DFS) in the Finance Ministry said on Wednesday that its strategic intervention has played a crucial role in the significant reduction of Non-Performing Assets (NPAs) in Scheduled Commercial Banks (SCBs).
Gross NPAs have decreased from ₹9,33,779 crore in March 2019 to ₹ 5,71,515 crore in March 2023.
Further, fresh slippage in respect of SCBs has declined from ₹3,01,795 crore (slippage ratio of 3.73 per cent) during FY19 to ₹2,13,368 crore (slippage ratio of 1.78) during the FY23.
These outcomes demonstrated the effectiveness of measures such as the Insolvency and Bankruptcy Code (IBC), amendments to the SARFAESI Act, and the Prudential Framework for Resolution of Stressed Assets, said DFS in its 2023 Year Ender.
DFS also highlighted the slew of measures taken by the government on the financial inclusion front, noting that initiatives such as the Pradhan Mantri Jan Dhan Yojana (PMJDY), Pradhan Mantri Jeevan Jyoti Bima Yojana, Pradhan Mantri Suraksha Bima Yojana, MUDRA, Stand Up India, and Atal Pension Yojana have made significant strides.
The DFS’s efforts have ensured that millions of citizens, especially those in vulnerable sections, have access to basic banking services, insurance, and pension schemes, the Year Ender highlighted.
Debt recovery
Comprehensive measures have been taken by the government and RBI to recover the bad debts. These measures have enabled SCBs to recover a total amount of ₹7.16 lakh crore (RBI provisional data for FY22-23) during the last five financial years.
DFS highlighted the change in credit culture with IBC fundamentally changing the creditor-borrower relationship.
Up to June 2023, in case of CIRPs ending in approval of resolution plans, the realisable amount to the creditors was ₹2.92-lakh crore. The liquidation value of these corporate debtors was ₹ 1.74-lakh crore against the total admitted claims of ₹9.23-lakh crore.
The SARFAESI Act 2002 has been amended to make it more effective. During the last five financial years, ₹ 1,51,428-crore have been recovered by SCBs through SARFAESI.
As on 13.9.2023, NARCL has made binding offers in 30 accounts with aggregate debt exposure of ₹ 1,69,910 crore and out of these it has acquired/onboarded four accounts with exposure of ₹23,663 crore. Further, NARCL has been declared successful in swiss challenge in another three accounts having exposure of ₹3,901 crore, and due diligence is underway in another 30 accounts having aggregate debt exposure of ₹66,951 crores.
Digital Payments
In the realm of digital payments, the DFS said it has been at the forefront of promoting a robust ecosystem.
The DIGIDHAN Mission, now under the DFS, has played a pivotal role in the phenomenal growth of digital payment transactions in India. The total number of transactions has surged from 2,071 crores in FY18 to an impressive 13,462 crores in FY23. BHIM-UPI, a major driver in this growth, recorded over 1,000 crore transactions in a single month in August 2023.
Agriculture Sector
In the agriculture sector, the DFS has facilitated the robust disbursement of credit, with the Agricultural Credit increasing from ₹ 8.45 lakh crore in FY15 to ₹ 21.55 lakh crore in FY23.
The Kisan Credit Card (KCC) scheme has played a pivotal role in providing timely and hassle-free credit to farmers, with over 7.36 crore operative KCC accounts.
Ease Reforms
In 2023, DFS continued the momentum of reforms, building on the foundation laid by earlier initiatives like the Enhanced Access and Service Excellence (EASE) Reform agenda — focussing on risk assessment, NPA management, financial inclusion, customer service, digital transformation, and more.
The EASE Reforms, governed by the EASE Steering Committee of the Indian Bank’s Association, have become deeply ingrained in all PSBs.
The journey, spanning from EASE 1.0 to the current EASE 6.0, has witnessed a transformative shift, emphasizing digital customer experience, analytics-driven business improvement, tech and data-enabled capability building, and HR operations enhancement.