Banks must depute senior officers to recover NPAs: FM

Concerned over rising non-performing assets of PSU banks, Finance Minister P Chidambaram Tuesday asked lenders to depute senior rank officers to recover bad loans.

“Banks have been advised to empower or set apart an officer of senior rank, at least of General Manager rank, to look at recovery, especially recovery from written off accounts...

We will try to recover as much as possible from the written off accounts,” he said, noting that defaulters often try to stop the recovery process.

The banks can look to establish a separate vertical, as was done by SBI, to improve recovery from such written off accounts defaults by big borrowers, Chidambaram said.
The government is monitoring the top 30 NPA accounts in each PSU bank and has asked lenders to set up separate verticals to recover money from written off accounts.

“It is a matter of concern that it is the big borrowers with loans of over Rs 1 crore who are defaulting,” Chidambaram noted.

The minister said that the situation was not as bad as it was in 2000, when gross NPAs touched a high of 14 per cent. The NPAs, which plateaued over the years at about 2 per cent, have started creeping up with the deceleration in growth in the past few years.
As of June, the gross NPA of nationalised banks was 3.89 per cent and the State Bank group at 5.50 per cent.

Expessing satisfaction over banks’ credit growth, he said that housing loans had recorded healthy growth in the first and second quarters and rose by 42 per cent and 61 per cent, respectively.

Education loans have also grown, he said. He said that the government will soon finalise modalities for Rs 14,000 crore capital infusion in public sector banks. He said clearance of projects by the Cabinet Committee on Investment has speeded up lending activities by banks.

“Even though there is a slowdown in the current fiscal year, we have got 173 new proposals each with over Rs 250 crore worth of investments. These are being processed,” the minister said.