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New Delhi [India], September 16 (ANI): In the last six financial years, after the Centre's four 'Rs' strategy (Recognition, Resolution, Recapitalisation and Reforms) was executed, banks have recovered Rs 5,01,479 crores, said Union Finance Minister Nirmala Sitharaman on Thursday.
Briefing media about Union Cabinet's decision on Wednesday, the Minister said the Centre approved guarantee up to Rs 30,600 crore for the Security Receipts which will be issued by the National Asset Reconstruction Company Limited (NARCL).
The 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 said.
The Minister further recalled that in 2018, just two out of 21 public sector banks were profitable. However, in 2021, only two banks reported losses, she said.
"I had announced in Budget 2021-22 with an intention to set up an asset reconstruction company and an asset management company to take over the existing stressed assets like loans," she said.
Sitharaman informed that along with National Asset Reconstruction Company Ltd, Centre is also setting up an India Debt Resolution Company Limited.
"Public sector Banks (PSBs) will have 51 per cent ownership in NARCL, while PSBs and public financial institutions will have a maximum of 49 per cent stake," she said.
Breaking the budgetary allocation, Sitharaman informed that 15 per cent cash payment will be made to banks for NPAs based on some valuation, and 85 per cent 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," she added. (ANI)