Banks recover ₹40,400 crore from defaulters: RBI report

Mumbai: Banks have seen a significant improvement in recovery of stressed assets helped by the Insolvency and Bankruptcy Code and amendments in the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interests Act, during FY18, according to the RBI data. The various channels through which lenders recovered their bad loans include the Insolvency and Bankruptcy Code, SARFAESI Act, debt recovery tribunals and Lok Adalats. While banks recovered ₹ 4,900 crore of bad loans through the IBC, the amount recovered through SARFAESI was ₹ 26,500 crore in FY18, the RBI said in its annual report on Trends and Progress of Banking in 2017-18, released to over the weekend. “Apart from vigorous efforts by banks for speedier recovery, amending the SARFAESI Act to bring in a provision of three months’ imprisonment in case the borrower does not provide asset details and for the lender to get possession of the mortgaged property within 30 days, may have contributed to better recovery,” the report highlighted. Besides recovery through various resolution mechanisms, banks are also cleaning up theirs balance sheets through sale of doubtful/ loss assets to assets reconstruction companies and other banks/NBFCs/financial institutions by taking haircuts, the report said.