Government asks banks to clean-up bad loans worth Rs 12 lakh crore

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The finance ministry has asked public sector banks to draw up a campaign for a one-time clean up strategy for clearing over 1 lakh bad loan recovery cases pending in debt recovery tribunals (DRTs).

The ministry has asked banks to use an alternate dispute resolution platform like Lok Adalat to bring down the number of cases.

According to banking sources, there are over 2 lakh cases pending with debt recovery tribunals of which over 1.5 lakh are original applications for over Rs 12 lakh crore exposure. Of these, the 12 public sector banks have over 1 lakh pending cases where the original exposure is around Rs 7.4 crore. The issue was discussed in the finance ministry in the presence of law ministry officials.

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The proposal is to have a scheme for cases of low claim value where the dispute is straightforward and parties are likely to opt for settlement.

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