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"Simplifed NPA recovery mechanism has yielded fruit"

ECONOMIC SURVEY

A simplified, non-discretionary and non-discriminatory mechanism for bringing down Non-Performing Assets (NPA) has led to recovery of Rs 5.46 billion from 2,21,763 NPA accounts till December 31, 2000, said the Economic Survey.

The survey for 2000-01 tabled in Parliament on Friday said in order to pave the way for a sustainable shift to a low interest rate regime, it is necessary for banks to achieve significant reduction in the stock of non-performing assets.

''Recent initiatives in speedier recovery of NPAs need to be supplemented by measures designed to reduce transaction costs in the Indian economy,'' it said, adding, this in turn calls for reduction in both interest and non-interest expenditure by banks and financial institutions in India.

Since loans and advances account for around 40 per cent of the assets of Scheduled Commercial Banks (SCBs), delay and default in payment of interest and/or repayment of principal has rendered a significant proportion of the loan assets non-performing.

The survey recalled that the RBI issued revised guidelines in July 2000 covering all sectors, including the small scale sector, to provide for a simplified, non-discretionary and non-discriminatory mechanism for recovery of NPAs with outstanding balances of upto Rs 50 million.

The 27 public sector banks, under these guidelines, recovered a total of Rs 5.46 billion till Dec 31, 2000.

PTI

Economic Survey 2000-2001
Budget 2001
Money

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