There is great news for people who have government bank accounts. Finance Minister Nirmala Sitharaman (FM Nirmala Sitharaman) has revealed important details on government bank accounts.
The Finance Ministry is concerned about the poor recovery rate from write-off accounts. According to sources, the ministry has stated that public sector banks should increase it to 40%.
The rate of recovery is 15 percent.
Currently, the recovery rate from written-off accounts is less than 15%. In the five years ending March 2022, public sector banks (PSUs) could only recover 14% of the amount written down. The total amount of Rs 7.34 lakh crore has been written off over this period. PSBs recovered Rs 1.03 lakh crore from this.
The meeting will be held with the government bank officials.
According to sources, banks get careless in recovering non-performing assets (NPAs) after writing off bad loans. He stated that more than this level of recovery is needed.
Furthermore, greater recovery from written-off accounts directly increases profits and improves capital. According to sources, the Department of Financial Services will shortly conduct a conference with senior officials from public sector banks to evaluate the department's position on the subject.
What is NPA?
NPA stands for Non-Performing Asset, which signifies that the debt is stuck. In other words, the bank's money becomes stuck if the lender cannot repay the installment after receiving the loan. Initially, an attempt is made to deposit this amount with the bank, but it is later declared as NPA.
The Reserve Bank of India (RBI) stated that Non-Performing Assets (NPAs) had been written off from the books of the concerned banks by RBI norms and policies authorized by the institutions' Boards of Directors. However, it also contains non-performing assets (NPAs) for whom full provisioning was made.