Though banks have been making serious efforts to reduce their non-performing assets through various legal channels, the amount recovered by scheduled commercial banks (SCBs) in 2015-16 at ₹22,768 crore was 26 per cent lower compared with ₹30,792 crore in the previous year, the Reserve Bank of India said.
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 ₹19,757 crore, compared to ₹27,849 crore in the previous year, said the report.
The deceleration in recovery by SCBs was mainly due to 52 per cent reduction in recovery through the SARFAESI channel, to ₹13,179 crore in 2015-16 from ₹25,600 crore in 2014-15. However, recovery through Lok Adalats soared 228 per cent year-on-year to ₹3,224 crore. Recovery via DRTs jumped 51 per cent y-o-y to ₹63.65 crore. 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 ₹72,626 crore from banks, compared with 14 ARCs acquiring ₹58,479 crore in the previous year.