Public Sector Banks (PSBs) have recovered over INR 222 billion through one-time settlement (OTS) in 2.44 million accounts over the last three years, 2015-16, 2016-17 and 2017-18.

There is an age-old saying, ‘The crisis makes the character’. This is established by the fact that banks appear to have stepped up the recovery efforts the most in 2017-18 to recover about INR 90 billion from close to one million accounts. Had it been attempted earlier, these figures would have been even better.

This assumes greater significance in the light of a newly introduced bad loan resolution scheme ‘Sashakt’ panel’s advice to banks to resort to recoveries through schemes akin to OTS to settle dues of NPAs up to INR 50 crore. The figures presented in the parliament covers 19 nationalised banks. It does not cover SBI group and IDBI Bank.

In 2015-16, PSBs were able to arrive at a settlement in case of 6.90 lac accounts and recovered INR 64.6 billion. In the next year 2016-17, recovery was to the extent of INR 67.8 billion from 740,000 accounts. Central Bank of India recovered INR 10.87 billion for 130,000 accounts. Union Bank of India recovered INR 8.28 billion out of 80,000 accounts.

According to RBI instructions, every bank is required to have a loan recovery policy which may cover negotiated settlements of NPAs. Accordingly, all PSBs have come up with OTS schemes. These schemes are in pursuance of board-approved policies of banks and are oriented towards sectors such as agriculture, MSMEs (Micro Small and Medium Enterprises), weaker sections and education loans and typically have an upper limit on the amount of NPAs.

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