Banks in Maharashtra say lack of state help hits loan recovery

They cite hurdles in getting approvals and assistance from magistrates for seizing physical assets under the law

Banks in this state say they are facing hurdles in taking action against loan defaulters, due to lack of support from the state.

They have complained about difficulties in approvals and assistance from district magistrates (DMs) and chief metropolitan magistrates (CMMs) for taking possession of physical assets under the law.

A senior public sector bank executive said this issue was flagged in the agenda for last week’s meeting of the State Level Bankers Committee.

Banks are struggling to contain under bad loans and have made recovery from non-performing assets a top priority in the ongoing quarter. According to rating agency ICRA, banks’ gross NPAs rose to 4.5 per cent of the total by end-December 2014 from 4.2 per cent in end-September. It crossed five per cent for public sector banks; for private banks, it was marginally up at 2.1 per cent.

Banks have raised their grievance with the chief secretary’s office. And, the Union finance ministry has sent a letter in this regard to the state government.

DMs and CMMs are empowered to issue orders for taking possession of secured assets by banks and financial institutions. The lawn also permits them to delegate these powers to a subordinate. Despite this, there are a large number of cases pending in this regard.