The Reserve Bank of India has allowed lenders/banks to transfer loans that have been classified as fraud by these lenders to Asset Reconstruction Companies (ARCs). Stressed loans including fraud loans that are in default for more than 60 days or classified as NPA are permitted to be transferred to ARCs. Banks will now be able to transfer to ARCs loan exposures classified as a fraud as on the date of transfer, provided that the responsibilities of the bank with respect to continuous reporting, monitoring, filing of complaints with law enforcement agencies and proceedings related to such complaints shall also be transferred to the ARC.
Here are figures for loans declared as fraud by banks for various financial years:
- For 2020-21 (FY21)– loans worth Rs 1.37 trillion were declared as fraud
- For 2019-20 (FY20)– loans worth Rs 1.81 trillion declared as fraud
- For 2018-19 (FY19)– loans worth Rs 64,539 crore declared as fraud