State-run banks wrote off Rs81,683-cr loans in FY17

State-run banks have written off loans worth Rs81,683 crore during fiscal 2016-17, finance minister Arun Jaitley informed the Rajya Sabha in a written reply on Tuesday.

The amount written off by public sector banks, including through compromise, during 2016-17 was Rs81,683 crore, including Rs20,339 crore by the State Bank of India, Jaitley said.

During the ongoing fiscal 2017-18 (up to September 2017), PSBs have written off about Rs28,781 crore, he added.

Jaitley said that loans are written off for tax benefit as well as capital optimisation, while borrowers of such loans continue to be liable for repayment.

"Therefore, write-off does not benefit borrowers," the minister said.

As per the Reserve Bank of India (RBI) guidelines and the policy approved by bank boards, non-performing assets (NPAs), or bad loans, including those for which full provisioning has been made on completion of four years, are removed from the bank balance-sheet by way of write-off.

Jaitley said the recovery of dues takes place on an ongoing basis under legal mechanisms, including the Secularisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, Debts Recovery Tribunals and Lok Adalats.

Minister of state for finance Shiv Pratap Shukla told the Rajya Sabha in reply to another question that in the five financial years since 1 April 2013, banks have reported 13,643 cases of fraud involving a total amount of Rs52,717 crore.

In the backdrop of several fraudsters like Nirav Modi, Mehul Choksi, Vijay Mallya and Jatin Mehta fleeing the country, the finance ministry has asked banks to collect passport details of big borrowers in 45 days.

In a bid to prevent alleged fraudsters like Nirav Modi and Vijay Mallya, who fled the country after defaulting on loans worth billions of Rupees, the finance ministry on Tuesday directed state-owned banks to obtain passport details of people

In case the borrower has taken loans of over Rs50 crore and doesn't have a passport, the bank should obtain a certificate in the form of declaration that the person doesn't have the passport, PTI quoted finance ministry sources as saying.

The ministry has given banks 45-day deadline to collect the required details.

It is still not known how getting passport details debar a fraudster from escaping the country without any timely action against the fraudsters fleeing the country.

Earlier last week, the cabinet approved the Fugitive Economic Offenders Bill, announced in the Budget for 2017-18, after Nirav Modi and his uncle Mehul Choksi allegedly defrauded state-owned Punjab National Bank of Rs12,700 crore and left the country and refused to cooperate with law enforcement agencies.

The union cabinet chaired by Prime Minister Narendra Modi also approved the setting up of a National Financial Reporting Authority (NFRA) as an independent regulator for the auditors.

On Monday, the finance ministry announced the appointment of a steering committee headed by secretary, Department of Economic Affairs.

The committee will consider various issues relating to development of fintech space in India with a view to make fintech related regulations more flexible and generate enhanced entrepreneurship in an area where India has distinctive comparative strengths vis-vis other emerging economies. The steering committee will also focus on how fintech can be leveraged to enhance financial inclusion of MSMEs.

Besides the DEA secretary, the high level committee includes secretary of financial services and secretaries in the ministries of electronics and information technology and micro, small and medium enterprises besides chairperson of the Central Board of Excise and Customs (CBEC), CEO of the Unique Identification Authority of India and deputy governor of RBI. Joint secretary (investment) in the Department Economic Affairs would be the convener of the panel.

The Steering Committee may also invite participants from the private sector.

The steering committee will:

• Take stock of the developments in the fintech sector globally, and in India, and arrive at a common shared understanding of the current state of play;
• Analyse critically the regulatory regime spread over different entities that has impacted the growth of fintech in India;
• Consider how fintech can be leveraged in critical sectors of the economy, especially financing of MSMEs, affordable housing, delivery of e-services to vulnerable sections, provision of land record management and other government services, access and adoption of digital payments, and to study the developments in these areas;
• Develop regulatory interventions, eg, regulatory sandbox model, that will enhance the role of fintech in the sectors identified for focused interventions;
• Promote ease of doing business in the fintech sector;
• Consider means of using data with GSTN and data residing with information utilities such as credit information companies (CICs) etc in open domain with a view to developing applications for financing of MSMEs;
• Work with government agencies like UIDAI to explore creation and use of unique enterprise identification number; and
• Consider international cooperation opportunities in fintech with countries like Singapore, UK, China, etc.