Mumbai: Net non-performing assets (NPAs) of public sector banks (PSBs) have declined to 1.3 per cent of net advances at the end of 2005-06, finance minister P Chidambaram told the Lok Sabha.

Gross NPAs of PSBs have declined from 5.6 per cent of gross advances as of March 31, 2005 to 3.7 per cent as of March 31, 2006 while gross NPAs have declined to Rs41,378 crore on March 31, 2006 from Rs47,696 crore on March 31, 2006, Chidambaram said.

Gross NPAs constituted 5.63 per cent of priority sector lending and 2.81 per cent of non-priority sector lending at the end of last fiscal, he said.

Chidambaram said the slow recovery in NPAs is due partly to lack of an effective and accurate land record system in the states, inadequate security available in NPA accounts, time taken in the proceedings in the Debt Recovery Tribunal and court cases among others.

PSBs, he said, have been making concerted efforts to recover their NPAs through issue of notices under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, one-time settlements and recovery through Lok Adalats. PSBs have recovered Rs10,590 crore of NPAs as cash during 2005-06, he added.

While ARCIL has near monopoly in acquiring bad debts of banks, banks will have more choices over a period of time, he said.