New Delhi: Union Finance Minister Nirmala Sitharaman pointed out that the execution of four ‘Rs’ strategy of Central Government has been a big success, and the banks have recovered Rs 5,01,479 crores in the last six financial years. The Minister added that, in 2018, just two out of 21 public sector banks were profitable. However, in 2021, only two banks had reported losses.
While briefing the media about Union Cabinet’s decision, Minister said that in 2015, an asset quality review of banks had happened which revealed a high incidence of Non-Performing Assets (NPAs).’In last six financial years, the govt’s 4Rs strategy–Recognition, Resolution, Recapitalisation and Reforms– was executed. After this banks have recovered Rs 5,01,479 crore,’ She also added that the centre has approved guarantee up to Rs 30,600 crore for the Security Receipts which will be issued by the National Asset Reconstruction Company Limited (NARCL).
Centre has also planned to set up an India Debt Resolution Company Limited, with an intention to set up an asset reconstruction company and an asset management company to take over the existing stressed assets like loans. Breaking the budgetary allocation, Sitharaman clarified that 15% cash payment will be made to banks for NPAs based on some valuation, and 85% will be given as Security Receipts. ‘For Security Receipts to have their value intact, the government has to give a backstop arrangement, hence the government guarantee of Rs. 30,600 crore cleared by Union Cabinet’, Finance Minister added.
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