New Delhi: The government has asked state-run banks to explore setting up a common electronic auction platform for selling confiscated properties, department of financial services secretary Rajiv Kumar said. The move is aimed to improve loan recoveries at these banks struggling under a mountain of bad loans.
The government is also working to take debt recovery tribunals (DRTs) online by end of this financial year, facilitating online filing of cases, paying fees, uploading orders and viewing case status. This, along with the recent decision to raise the floor for filing of cases in DRTs to ₹ 20 lakh from ₹ 10 lakh, is expected to make the DRT process faster.
If successful, it will give banks an effective tool to fast-track recoveries, helping shore up their balance sheets and hasten their move towards profitability.
State-run banks posted huge losses due to rising non-performing assets (NPAs) and subsequent provisioning requirements in the March quarter, but have recovered marginally in the June quarter.
Speaking to reporters, Kumar said the government has also asked state-run banks to work with the Indian Banks’ Association (IBA) to develop the common auction platform. The government hopes this will rectify the low level of interest in properties auctioned by state-run banks seized across the country.
“Details of the property, photos, loan amount, title, auction amount and all other details will be available on the platform and this will help banks get more bids and a better price for the auctioned properties," Kumar said.
The platform can be used to search properties that can be auctioned. It can also reduce the cost of auctioning properties through economies of scale.
Kumar added that the government’s decision to raise the limit of filing cases will help in de-clogging DRTs as banks will now look to resolve these cases under the Sarfaesi Act.
“Lower value loans are secured loans. So, it makes sense to take action under Sarfaesi and attach the properties. This will decongest debt recovery tribunals and will be able to focus on resolving high value cases thus helping in faster recovery of NPAs," he said.
Of the 38,376 cases pending in debt recovery tribunals as on 30 June 2018, 38% of the outstanding cases were in the ₹ 10-20 lakh category but the amount involved was only 4% of the total outstanding amount.
Kumar said the government has also requested chief secretaries of states to ask the district magistrates to pass orders on assets seized by banks within the time frame of 60 days.
The government estimates that around 10,000 applications by state-run banks involving at least ₹ 40,000 crore of assets is stuck for want of approvals by district magistrates.