Govt, RBI to tighten loan recovery norms

  • Mahua Venkatesh, Hindustan Times, New Delhi
  • Updated: Jul 16, 2014 23:15 IST

The government and the Reserve Bank of India (RBI) are looking to further tghten recovery norms for wilful defaulters to counter the persistent issue of rising non-performing assets (NPA) — loans that do not yield returns.

While the issue is being looked into and discussions expected to start soon, sources said that defaulters if found wilful, might not be given the flexibility of time and recourse processes which unnecessary derails the recovery process.

Finance minister Arun Jaitley last week said that the recovery process would be further tightened. A committee has already been constituted to look into the issue.

“It is too early to say how the norms will be further tightened but there has been significant rise in the non-performing asset level and this needs to be addressed and one of the ways is to ensure that wilful defaulters are not given unnecessary freedom and flexibility of time to delay the process,” an official source who refused to be identified told Hindustan Times.

“It is important that norms are further tightened as this would help the banks in the recovery process, once a borrower is proved to be a willful defaulter, stringent action must be taken and banks must be allowed more teeth for the same,” said M Narendra, chairman and managing director, Indian Overseas Bank.

NPA level in government banks rose to 4.72% or Rs 2,16,729 crore as of March 2014 while it was 3.84% in the corresponding period in 2013.

The government and bank managements are also undertaking regular reviews of large-sized NPAs. In a bid to address the situation, banks have already been asked to deny additional loans to promoters of companies that have defaulted on repayment.

Besides, promoters of companies seeking corporate debt restructuring might also be asked for a list of personal assets which will be treated as collateral.

From Around the Web
Sponsored by Revcontent

also read

Trade unions boycott EPFO trustees meet
Show comments

Steps to disable Ad Blocker on your browser


In order to serve content on our website, we rely on advertising revenue which helps us to ensure that we continue to serve high quality unbiased journalism. From our end, we will aim to show clean and unobtrusive ads to provide you with a great browsing experience.

Request to please follow the steps below and once done, please refresh your page.


For Chrome and Ad BlockPlus users

1.Press the ‘ABP’ icon in your toolbar at top right of this page

2. Click on ‘Enabled on this site’; this should now change to ‘Disabled on this site’


chrome



For Chrome and Ad Block users

1.Press the ‘AdBlock’ icon in your toolbar

2.Select the option ‘Don’t run on pages on this domain’ and then click ‘exclude’ on the pop up


chrome

Steps to disable Ad Blocker on your browser


In order to serve content on our website, we rely on advertising revenue which helps us to ensure that we continue to serve high quality unbiased journalism. From our end, we will aim to show clean and unobtrusive ads to provide you with a great browsing experience.

Request to please follow the steps below and once done, please refresh your page.


For Mozilla and AdBlock Plus (ABP) users

1.Press the ‘ABP’ icon in your toolbar

2.Select the option ‘Disable on hindustantimes.com’


chrome

Steps to disable Ad Blocker on your browser


In order to serve content on our website, we rely on advertising revenue which helps us to ensure that we continue to serve high quality unbiased journalism. From our end, we will aim to show clean and unobtrusive ads to provide you with a great browsing experience.

Request to please follow the steps below and once done, please refresh your page.


For Internet Explorer and AdBlock Plus users

1.Press the ‘AdBlock Plus’ icon in your status bar at the bottom of the screen

2.Select the option ‘Disable on hindustantimes.com’


chrome

Steps to disable Ad Blocker on your browser


In order to serve content on our website, we rely on advertising revenue which helps us to ensure that we continue to serve high quality unbiased journalism. From our end, we will aim to show clean and unobtrusive ads to provide you with a great browsing experience.

Request to please follow the steps below and once done, please refresh your page.


For Safari and AdBlock users

1.Press the ‘AdBlock’ icon in your toolbar

2.Select the option ‘Don't run pages on this domain’ and then click 'exclude'


chrome