PMLA: With ED’s actions, PSBs get back over Rs.15k crore, says Sitharaman

Virendra Pandit

New Delhi: Finance Minister Nirmala Sitharaman on Tuesday said the Enforcement Directorate (ED) has confiscated assets worth Rs 15,186.64 crore under the stringent Prevention of Money Laundering Act (PMLA) and almost all of these have been restituted to public sector banks (PSBs).

Replying to supplementary questions in the Rajya Sabha, she said specific actions through various legal provisions are being taken against defaulters and, as a result, “huge monies” are going back to the banks.

Sitharaman informed the House that as of March 31, 2023, legal suits were filed for recovery against 13,978 loan accounts, action under the SARFAESI Act has been initiated in 11,483 cases, FIRs have been filed in 5,674 cases, and an aggregate amount of Rs 33,801 crore has been recovered.

“As of December 1, 2023, assets amounting to Rs 15,186.64 crores under the PMLA have been confiscated by the ED, and restituted to the PSBs,” she said.

Rajya Sabha Chairman Jagdeep Dhankhar asked the minister to explain the meaning of “phone banking” which was mentioned in reply to a supplementary question.

Explaining the meaning, Sitharaman said “phone banking” was the method through which “political interference (during UPA rule of 2004-2014) spoilt all our banks and drove them to a loss-making situation.”

“Phone banking” was when some people would call the banks and say ‘so and so will come to seek a loan from your bank, please grant it’, meaning that there was no need to look at their eligibility, etc, and that the loan must be granted,” the minister said.

Sitharaman said calls were made to the banks during the 10 years of the UPA rule to grant loans to unworthy people.

“The burden fell on us to sort the Indian banks’ problems out with reforms. Prime Minister Narendra Modi sat with all of us, including my predecessor Arun Jaitley. We spent a lot of time understanding where the problem was and worked together with the RBI,” Sitharaman said.

It must be looked at what contributed to the NPAs and made Indian banks have a twin balance-sheet problem which brought down the Indian economy to the ‘Fragile Five’, she added.

Because of the measures taken by the Modi government, she said the Indian economy is now the world’s fastest-growing economy, registering a 7.6 percent GDP growth rate in the last quarter.

Sitharaman also informed that the Punjab and Maharashtra Cooperative Bank (now merged with Unity Small Finance Bank) has recovered Rs 104.02 crore with active cooperation and support from agencies.

Assets amounting to Rs 692.89 crores have been confiscated under the provisions of the Fugitive Economic Offenders Act, 2018, she said.

Over the last two financial years, the number of non-performing asset (NPA) accounts in commercial banks has declined from 2.19 crore to 2.06 crore, showing a decrease of 6.2 percent.

Similarly, the aggregate outstanding of such accounts (gross NPAs) has declined from Rs 7.41 lakh crore to 5.72 lakh crore during the same period, showing a decline of 22.9 percent.

Also, the slippage ratio (fresh slippages of NPAs during the financial year as a percentage of standard loans and advances at the beginning of the financial year) of banks has declined from 2.74 percent (fresh slippages of Rs 2.86 lakh crore) in the financial year 2021-22 to 1.78 percent (fresh slippages of Rs 2.13 lakh crore) in the financial year 2022-23.

Net NPA ratio, Sitharaman said, has come down to 0.95 percent in 2022-23 for all commercial banks from 5.94 percent in 2017-18.

In the case of state-owned banks, the net NPA has declined to 1.24 percent from 5.94 percent in 2017-18.