ED registers 490 fraud cases related to NPAs worth over Rs 20 crore

The Directorate of Enforcement has recorded 490 bank fraud cases related to NPAs of Rs 20 crore or more in the last 5 years under the provisions of the Prevention of Money Laundering Act, 2002 (PMLA)

The Directorate of Enforcement has recorded 490 bank fraud cases related to non-performing assets (NPAs) of Rs 20 crore or more in the last 5 years under the provisions of the Prevention of Money Laundering Act, 2002 (PMLA), Parliament was informed on Tuesday.

"As on July 20, 2023, proceeds of crime amounting to Rs 26,732.68 crore approx. have been attached/freezed, 82 persons have been arrested and 80 prosecution complaints have been filed before the special court, PMLA in these cases," Minister of State for Finance Bhagwat Karad said in a written reply to the Rajya Sabha.

Further, he said, assets worth Rs 15,113.02 crore have been confiscated and restituted to public sector banks.

In the case of an account classified as NPA, banks initiate recovery action under various recovery mechanisms, such as filing a suit in civil courts or in debts recovery tribunals, action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, filing of cases in the National Company Law Tribunal under the Insolvency and Bankruptcy Code, 2016, and through negotiated settlement/compromise and sale of NPAs.

Further, in respect of fraud cases, as per the RBI's Master Direction on Frauds, banks are required to lodge complaints with law enforcement agencies, he said.

He also said that NPAs over Rs 20 crore and above of Scheduled Commercial Banks and All India Financial Institutions have seen a reduction decline in the last five financial years.

At the end of 2018-19, the outstanding NPAs stood at Rs 7,09,907 crore. In the following year, it came down to Rs 6,32,619 crore.

NPAs came down further to Rs 2,66,491 crore at the end of March 2023.

Comprehensive measures have been taken by the government and Reserve Bank of India (RBI) to reduce non-performing assets (NPAs), enabled by which gross NPAs of SCBs have declined from the peak of Rs 10,36,187 crore (gross NPA ratio of 11.18 per cent) as on March 31, 2018, to Rs 5,71,515 crore (gross NPA ratio of 3.87 per cent) as of March 31, 2023, Karad said in another reply.

Talking about various steps taken by the government, he said, the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, has been amended to make it more effective.

The pecuniary jurisdiction of debt recovery tribunals (DRTs) was increased from Rs 10 lakh to Rs 20 lakh to enable the DRTs to focus on high-value cases, resulting in higher recovery for the banks and financial institutions, the minister said.

Besides, he said, National Asset Reconstruction Company Limited has been set up as an asset reconstruction company with an aim to resolve stressed assets above Rs 500 crore each.

The government has also approved extending a guarantee of up to Rs 30,600 crore to back Security Receipts issued by NARCL to lending institutions for acquiring stressed loan assets, he said.

Wilful defaulters are not sanctioned any additional facilities by banks or financial institutions and their unit is debarred from floating new ventures for five years, and wilful defaulters and companies with wilful defaulters as promoters/directors have been debarred from accessing capital markets to raise funds, he said.