New Delhi: The banking clean-up drive had started showing results with public sector banks increasingly adopting a prudent approach instead of aggressive lending practices, said financial services secretary Rajiv Kumar today. “The NPA crisis brought on an opportunity for introduction of responsible and responsive banking. All the PSBs, which have about 75% market share, decided last year to adopt EASE (Enhanced Access and Service Excellence), ushering in a paradigm shift in their approach," he told PTI. “Gradually, the Indian banking system is moving towards a new normal, that is clean banking," he said.

To deal with the twin balance sheet challenge, he said, the four Rs—recognition, recapitalization, resolution, and reform—were put in place. It yielded a rich dividend assisted greatly by the implementation of an asset quality review and the Insolvency and Bankruptcy Code, he said, adding the resolution process brought down non-performing assets (NPAs) by over 1 trillion in the past year.

Banks in the first quarter of 2018-19 have made a recovery of 36,551 crore, registering 49% growth over the year-ago period.

Highlighting other measures by the government, he said: “Bank accounts of around 2.29 lakh shell companies have been frozen. Banks are already checking for fraud in all bad loans of over 50 crore.

Passport details have been sought. Another impact is that defaulters have started approaching banks on their own as they face the threat of losing control of their business."

At the same time, the government decided to provide 2.11 trillion capital support to the banks in order to maintain their regulatory capital requirement, he said.

Consequent to these measures, there are signs of improvement. For example, provision coverage ratio (PCR) of PSBs has gone up to a healthy 63.8% in 2018 from 52.15% in 2016. Credit offtake of banks improved from 9.6% in end-November 2017 to 11.5% in mid-April 2018.

Kumar also expressed hope that during the course of this financial year, banks would come out of the RBI’s prompt corrective action framework.

On the financial inclusion front, the secretary said, it was the key focus area of this government, which is committed to serve the underserved and fund the unfunded. “We are looking to provide employment opportunities and social security coverage to the underserved. There is a clear focus on MSMEs and small enterprises through Mudra. There is a tie-up with 24 e-commerce firms to give loans under the Mudra scheme," he said. During the first four months of 2018-19, 52,127 crore had been disbursed under the Mudra scheme to 1.04 crore beneficiaries, of which 74% were women, he said.

All PSBs had joined the Trade Receivables Electronic Discounting System (TReDS) and bank credit to MSMEs registered growth of 9 per cent on an annual basis in May 2018, he said.

Emphasising the importance of Jan Dhan accounts, Kumar said it had become a uniform platform through which most government schemes we’re being serviced. Even the Pradhan Mantri Jan Arogya Abhiyan to be launched on 25 September would also be delivered through this architecture, he said.