New Delhi: Nirmala Sitharaman, the Union Finance Minister, on Monday slammed the previous UPA administration for allegedly failing to recover money from those who turned their loan accounts into non-performing assets, claiming that under the Modi administration, banks for the first time received money from defaulters.
Ms Sitharaman further stated in the Lok Sabha that actions had been taken against those who have defrauded small savings depositors through different fraudulent acts, including the filing of FIRs.
She said the Reserve Bank of India is also monitoring activities of App based financial companies.
Responding to questions by DMK’s T R Baalu about the government’s action against loan defaulters and NPAs, the minister said “writing off” loans does not mean “complete waive off” and the banks are following every loan to recover the outstanding amount.
“Over ₹ 10,000 crore, I am saying ‘over’ as I don’t want to disclose the actual figure, have been recovered by PSU banks from loan defaulters after taking over their assets.
“For the first time in the country, under the Modi government, the banks got back money from many NPAs. While during the UPA government, no money was recovered from the NPAs,” she said.
The Finance Minister’s did invite sharp reactions from the Congress leader in Lok Sabha Adhir Rajan Chowdhary.
The Financial Resolution and Deposit Insurance Bill, 2017 (FRDI Bill) was tabled in the Lok Sabha in August 2017, according to the minister, and was then submitted to the Joint Committee of Parliament for examination and report. The FRDI Bill’s principal goal was to establish a specialised resolution process for certain financial sector firms.
In August 2018, the administration withdrew the FRDI Bill to allow for a more thorough assessment and reconsideration of the issue.
The government has not taken a decision to bring a new law to provide for a legal framework for resolution of financial firms, she said.
Sitharaman said with a view to provide a greater measure of protection to depositors in banks, the Deposit Insurance and Credit Guarantee Corporation (DICGC) has raised the limit of insurance cover for depositors in insured banks from the level of ₹ 1 lakh to ₹ 5 lakh per depositor with effect from February 4, 2020 with the approval of the central government.
The minister said the government has already notified the Insolvency and Bankruptcy (Insolvency and Liquidation Proceedings of Financial Service Providers and Application to Adjudicating Authority) Rules, 2019 to provide a generic framework for insolvency and liquidation proceedings of systemically important Financial Service Providers (FSPs) other than banks on November 15, 2019.
Subsequently, she said, the government has also notified on November 18, 2019, that the insolvency resolution and liquidation proceedings of the Non-Banking Finance Companies (including housing finance companies) with asset size of ₹ 500 crore or more shall be undertaken in accordance with the provisions of the Insolvency and Bankruptcy Code, 2016 (IBC, 2016).
Accordingly, the framework to deal with the select Non-Banking Finance Companies is already in place under IBC, 2016, she said. PTI ACB DV DV
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