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Title: Combined discussion on the statutory resolution regarding disapproval of Securitisation and Reconstruction of Financial Assets and enforcement of Security Interest (Second) Ordinance, 2002 moved by Shri Basudeb Acharia and Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Bill, 2002 moved by Shri Jaswant Singh. (Resolution withdrawn and Bill passed)
MR. CHAIRMAN : Now, the House will take up Item Nos. 23 and 24 together.
SHRI BASU DEB ACHARIA (BANKURA): Sir, I beg to move:
“That this House disapproves of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (Second) Ordinance, 2002 (No.3 of 2002) promulgated by the President on 21 August, 2002. ”
THE MINISTER OF FINANCE AND COMPANY AFFAIRS (SHRI JASWANT SINGH): Sir, I beg to move**:
“That the Bill to regulate securitisation and reconstruction of financial assets and enforcement of security interest and for matters connected therewith or incidental thereto, be taken into consideration.”
SHRI BASU DEB ACHARIA : Sir, this Government has now taken the path of Ordinance for avoiding Parliament and evading the Standing Committees.
The Standing Committees were set up to scrutinise the important Bills. I am not saying that all the Bills should be sent to the Standing Committee, but important Bills like this should be sent to the Standing Committee. Without any scrutiny by the Standing Committee, this Ordinance was first promulgated in June and the Bill was also introduced. But that Bill could not be passed. Then again, it
* The Bill was Introduced on 19.7.2002
* * Moved with the recommendation of the President
was promulgated on 22nd August because the Ordinance was not replaced by an Act within two months of its promulgation.
Five Ordinances have been promulgated during the inter-Session period. Even on the day of summoning the House, one Ordinance was promulgated. The House was summoned in the evening and the Ordinance was issued in the morning. Thus, gradually this Government is avoiding Parliament as well as the Standing Committees.
The main purpose of bringing this Ordinance was to curb the menace of Non Performing Assets. I do not understand why it is called an asset, if it cannot perform. This had been promulgated first in the month of June. Already five months have elapsed. In spite of having an Ordinance for five months, in spite of having an institution in place, there has not been any curb in the increase of Non Performing Assets.
In the current year the increase in the Non Performing Assets is about 11 per cent. Now it stands at Rs.70,904 crore. The borrowers have defaulted in the current year in spite of having an Ordinance that had been promulgated. After promulgation of the Ordinance, the Government has already started taking action. But what is the result? How could the Government not curb or reduce or take any stringent measure against the defaulters?
In this very House we have been demanding and asking that some stringent measures should be taken against the defaulters. We have also been demanding that the names of those defaulters should be placed on the Table of the House. Their names should be disclosed. You know this better than I do.
I raised the issue of the Indian Bank in this House. In one year that particular Bank earned a profit of about Rs.500 crore, but in the very next year, that is, in 1996-97, that Bank incurred a loss of about Rs.450 crore. Why did it happen? I read out a list of companies which took loans of huge amounts of Rs.10 crore, Rs.15 crore and Rs.20 crore. You know who are the owners of those companies which defaulted. That is the reason why that particular Bank incurred such a loss. This is not the case of one particular Bank; this is the case of almost all the nationalised banks.
Very recently, the Reserve Bank of India has come out with a report particularly on Non Performing Assets of nationalised banks and other financial institutions. If you go through that report, you will be able to know how this menace has been increasing. In 1992-93, the total amount of NPA was Rs.39,253.14 crore.
In 1993-94, the amount was Rs.41,000 crore. How is it increasing every year? But in the next year, 1994-95, there has been a reduction. Again, it increased in 1996-97 and again, there was an increase in 1997-98 when the figure rose to Rs. 45,652 crore. In 1998-99, it was Rs.51,000 crore and then it went up to Rs.53,000 crore and then to Rs.54,000 crore. Now it stands at Rs.70,904 crore. If you see the NPAs of nationalised banks in non-priority sector, it is 56.90 per cent in the case of Allahabad Bank. I am not talking of the priority sector nor of the small scale sector nor of the agricultural sector, I am talking of non-priority sector. In agricultural sector, it is only Rs. 10.04 crore. In non-priority sector, the figure against Andhra Bank is Rs. 50.68 crore. In the case of all the nationalised banks, the percentage of NPAs in non-priority sector is more than 50. In the case of
State Bank of India, it is Rs. 48.51 crore, and Rs.62.85 crore in the case of the State Bank of Travancore. It is alarming to see how it is gradually increasing.
In the case of development and financial institutions, particularly of IDBI, in March, 1988, the amount was Rs.5,101 crore. In March 2001, it increased to Rs.10,880 crore. In March, 1998, the figure for ICICI was Rs.2,811 crore which increased to Rs.5,988 crore in March, 2001. Similarly, in the case of IFCI, it was Rs. 2,663 crore which increased to Rs.6,077 crore. It is more than double. The same is with the case of IIBI and SIDBI. The current figure of SIDBI is not available but the figure of 2001 is available. However, in the case of all financial institutions, there has been an increase in the percentage of NPAs. The percentage of IDBI is 14.8. It is 21 per cent for IFCI and 16.1 per cent in the case of IIBI. This is the situation in regard to the Non-Performing Assets.
I would like to know from the hon. Minister on one point. We also feel that there is an urgency to look into it because in this very House, he described the NPAs as loots and not bad debts. It is correct. He has realised now that these are not bad debts. If these are loots, then how are the nationalised banks permitted to write off a certain amount of this bad debt? I have the figure of the amount written off last year. An amount of more than Rs. 450 crore has been written off regarding the State Bank.
The Minister has correctly described it as ‘loot’ and not ‘bad debts’. If it is loot, then how had the Bank been permitted to write off a certain percentage of NPAs? Whose debt has been written off? I would also like to know from the Minister as to what action has been taken against them; as to how many have been prosecuted; and as to how many have been arrested for looting the money. If it is loot, then some legal action should have been taken. How much money has been recovered since the promulgation of this Ordinance? It is because the main purpose of promulgation of this Ordinance was to recover the money from the defaulters. How much has been recovered?
The Minister had stated that the total amount of NPA of SBI as on 1st April, 2002 was Rs. 15,485.85 crore. The total amount recovered was Rs. 4,137 crore. It is because we had the Debt Recovery Tribunal. The Act was enacted a few years back. What is the amount recovered after setting up the Debt Recovery Tribunal? There was a lacuna in that. The Debt Recovery Tribunal was not able to tackle the situation. That is why the Government felt that there should be another organisation and there should be another Act for the securitisation of assets. The
main purpose of this Bill is to reduce the NPAs and to recover the amount which is lying as NPAs.