New banking secretary Hasmukh Adhia in his maiden meeting with chairmen and managing directors of public sector banks to be held today will review developments on the top 20 non-performing asset (NPA) accounts in which principal amount of over Rs 20,000 crore is involved.
The key message from the Prime Minister's Office that Adhia is to convey the top bankers is to avoid 'defensive banking' and go aggressive on credit offtake, bad debt recovery and other aspects of banking.
A top department of financial services official told dna, "The top NPA accounts are on the government radar. We have been monitoring the developments in at least 20 top NPAs over the last six months. These developments will be reviewed in the meeting. The meeting will also review the progress made on the opening of the accounts under Jan Dhan Yojana." This meeting will be a precursor to the PM's meeting with the bank honchos.
The top NPA account in the banking system is of Vijay Mallya-owned Kingfisher Airlines Ltd, which owes 7,000 crore to a consortium of 17 banks led by State Bank of India (SBI), Winsome Diamond and Jewellery Co Ltd (Rs 2,660 crore), Electrotherm India Ltd (Rs 2,211 crore), Zoom Developers Pvt Ltd (Rs 1,810 crore), Sterling Biotech Ltd (1,732 crore), Orchid Chemicals & Pharmaceutical Ltd (Rs 938 crore) and Decan Chronicle Holdings Ltd (Rs 700 crore).
"The one common thing, which is a prime concern for the ministry, is that collateral in most of the cases is even less than half of the amount each of them owe to the banks," the official said.
The official, however, did not share information on whether the government has identified individual NPA accounts to take up any action. The current NPA in the banking sector stands at Rs 192,000 crore, which is almost 5% of the total advances. Recovery of bad debt is not going to be a cakewalk for the government as it is staring at a huge list of NPA cases under litigation. About Rs 70,000 crore, or a third of total bad loans, is locked in a legal battle, with suits being filed in at least 4,000 cases, according to sources close to the development.
According to All India Bank Employees Association, Maharashtra tops the number of suits filed, with 1,076 accounts worth Rs 26,921 crore under judicial scrutiny. Delhi ranks the second with 484 cases worth Rs 10,055 crore. Andhra Pradesh is third with 413 cases worth Rs 6,525 crore and Tamil Nadu is fourth with 378 cases involving Rs 5,003 crore.
According to sources, in the case of SBI which had a bad debt of Rs 61,605.35 crore on its balance sheet in March end, NPA accounts worth Rs 4,327.56 crore are locked in a legal battle. Eighty such cases in Mumbai alone are under legal purview. "The ministry does not want to seen interfering in the day to day working of the banks. But the forensic audit has to be followed up by the bank and necessary action be initiated even if it involves collaborating with other agencies," the official said.
Meanwhile, banks may take over Mallya's Goa villa and a commercial property, the Kingfisher House, in Mumbai soon. Bankers are filing caveats in four different courts, so any court cannot revoke the willful defaulter tag.
Adhia will also take feedback from the bankers on the implementation of the Jan Dhan Yojana. As of now a total of 7.23 crore accounts have been opened under the scheme.
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