BusinessBanks wrote off NPAs over 10 lakh crore in last 5 financial...

Banks wrote off NPAs over 10 lakh crore in last 5 financial years: FM

Date:

Banks have written off bad loans worth Rs 10,09,511 crore during the last five financial years, finance minister Nirmala
Sitharaman informed Parliament on Tuesday.
The non-performing assets (NPAs), including those in respect of which full provisioning has been made on completion of
four years, are removed from the balance sheet of the bank concerned by way of write-off, she said in a reply to Rajya Sabha.
“Banks write off NPAs as part of their regular exercise to clean up their balance sheet, avail tax benefit and optimise capital,
in accordance with RBI guidelines and policy approved by their boards.
“As per inputs received from RBI, Scheduled Commercial Banks (SCBs) wrote off an amount of Rs 10,09,511 crore during
the last five financial years,” she said.
As borrowers of written-off loans continue to be liable for repayment and the process of recovery of dues from the borrower
in written-off loan accounts continues, write-off does not benefit the borrower, she said.
Banks continue to pursue recovery actions initiated in written-off accounts through various recovery mechanisms available,
such as filing of a suit in civil courts or in Debts Recovery Tribunals, filing of cases under the Insolvency and Bankruptcy Code,
2016 and through sale of non-performing assets.
SCBs have recovered an aggregate amount of Rs 6,59,596 crore, including recovery of Rs 1,32,036 crore from written-off
loan accounts during the last five financial years, she said.
In cases where it is prima facie found that officials are responsible for the lapses of non-compliance with the laid down
systems and procedures or misconduct or non-adherence to the due-diligence norms, action is initiated against the erring
officials under the board-approved staff accountability policy, she said.
As per inputs received from public sector banks, she said, staff accountability in respect of NPA cases has been fixed
against 3,312 bank officials (of AGM and above rank) during the last five financial years, and suitable punitive actions have
been taken commensurate to their lapses. Replying to another question, Sitharaman said Indian Banks Association (IBA) has
informed that at present, only a few banks are using blockchain at a small scale.
As such, the issue pertaining to interoperability of such a platform between banks is not present, she said.
Further, she said Indian Banks' Blockchain Infrastructure Company (IBBIC) Private Limited that was incorporated with an
objective of providing a platform for exploring, building, and implementing Distributed Ledger Technology (DLT) solutions for
the Indian financial services sector, is currently working on scoping the implementation of domestic of Credit (LC)
issuance as its first use case through the platform.
The consortium consists of 18 banks comprising leading public and private sector banks of .
Reserve Bank of India (RBI) has been providing guidance for development of blockchain-based application through its
mechanism for testing of innovative technologies, products and services, known as regulatory sandbox. Blockchain technology
has been listed as one of the innovative technologies in this regard, where innovators can apply to test their products through
this mechanism, she said. There is no proposal to set up guidelines or prescribe a model common blockchain technology
platform for the banks, she said.

80 Indian start-ups may go for IPO in next 5 years
India is likely to see over 100 mature, large-scale profitable or on the path to profitability startups in the next five years, of which 80
have the potential to go for public listing, market research and consultancy firm Redseer said on Tuesday. Redseer Strategy
Consultants, in a report on IPOs, said 20 of the mature startups have gone public so far. “India may see over 100 matured, large-
scale profitable/path-to-profitability start-ups in the next five years. “With about 20 of them already being listed, about 80 start-ups
have the potential to look at an IPO journey,” Redseer said in the report.
It also said technology IPOs have seen a steeper crash compared to stocks of consumer companies mainly due to the global
macro situation.
The report, authored in collaboration with HSBC, noted that technology companies have now prioritised growth. “A typical
company that would be cash flow positive two years from now would see discounting of at least 20-30 per cent of their valuations in a
low-interest rate situation, which goes up significantly in a high-interest rate situation which we are seeing right now,” it said. The firm
sees significant room for growth in public market cap in India compared to other countries.
Out of the about $43 trillion market capitalisation in the US, around 25 per cent can be attributed to technology or new age
companies which includes giants like Apple and Amazon. In India, with about $3.9 trillion market capitalisation, only about 1 per cent
can be attributed to technology or new age companies, the report said. “When we look at similar situations in the past 20-odd years,
we realize that it still takes a bit of time for markets to come back sustainably, even after the interest rates start dropping. “Because,
in effect, the market rates would have already factored in the decreasing interest rates into the prices.
“The learning is that there may be more time, maybe a few quarters, for the markets to recover. “We always see IPOs bouncing
back post downturns,” Redseer Strategy Consultants Partner Rohan Agarwal said.
According to the report, there are a lot of metrics that the startups will need to focus on in their IPO journey, including
market leadership, clearly visible total addressable market, multiple use cases, predictable revenues, high operating leverage,
sustainable unit economics and a clear path to profitability.

Northlines
Northlines
The Northlines is an independent source on the Web for news, facts and figures relating to Jammu, Kashmir and Ladakh and its neighbourhood.

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