IBC helped recovery of 14% bad loans in FY24: SBI Annual Report
The SBI Annual Report for FY24 says that the bank made recoveries from AUCA accounts to the tune of Rs 6,934 crore in FY24 even as it wrote off Rs 16,161 crore during the year. AUCA or Advance Under Collection Account (AUCA) is a dummy account maintained by SBI in which written off loan accounts are transferred.
In the financial year since FY19, the country’s largest bank has written off Rs 2.05 lakh crore, while recovering around Rs 50,000 crore from AUCA loans during the same period. However, the amount of written off loans have come down sharply from Rs 58,900 crore in FY19 to Rs 16,161 crore in FY24.
According to the bank’s annual report, of total recoveries from AUCA and NPA, 34% were on account of compromises, 28% through normal recovery methods, 14% through insolvency and bankruptcy process, 10% through sale to ARCs and 9% through SARFAESI.
According to SBI Annual Report, Insolvency and Bankruptcy Code (IBC) 2016 for resolution of stressed assets has provided the bank with a time-bound, transparent and effective mechanism to tackle Stressed Assets.
“Resolution has been achieved in some of the high-value NPA accounts referred to the National Company Law Tribunal (NCLT) under the Code. The cases referred to NCLT are also monitored by specialised teams at SARG. A total of 1,156 cases (Whole Bank) were referred to the NCLT as on 31st March 2024 out of which 951 cases have been admitted and 245 cases have been resolved,” says SBI Annual Report for FY24.
Compromise Settlement is also offered to all eligible cases to recover sticky loans. The bank Board approved One Time Settlement (OTS) Scheme, which is non-discretionary and non-discriminatory, is also offered from time to time to eligible borrowers for recovery/resolution
The SBI Annual Report says the Prudential Framework for Resolution of high-value Stressed Assets by RBI has provided an avenue for timebound resolution of these accounts (outside the NCLT process).
The bank has set up a team to look after the sale of assets to Asset Reconstruction Companies (ARCs) on a Cash and/or Security Receipts (SR) basis
In non-NCLT cases, recovery is explored through action under the SARFAESI Act and suit filing in DRTs and Courts. The sale of mortgaged properties is explored through a common e-Auction platform https:// ibapi.in under the aegis of IBA.
The bank said that slippage, which indicates the incremental fall in credit quality during the financial year FY24, increased by 10.29% to Rs 20,317 crore. Despite the rise in slippages, the slippage ratio declined by 3 bps to 0.62% in March 2024. Furthermore, marginal rise in slippages during FY24 was more than matched by good recoveries from AUCA. The Provision Coverage Ratio (PCR) for the bank stood at 75.02% without AUCA and at 91.89% with AUCA as of March 2024.
Road & ports and other infrastructure sectors accounted for 15% of the bank NPAs as on 31 March 2024.
Also See: Creditors recover Rs 3.36 lakh crore from 947 resolved CIRPs till 31 Mar’24
