RBI allows lenders to sell fraud loans to Asset Reconstruction Companies

RBI allows lenders to sell fraud loans to Asset Reconstruction Companies

• The Reserve Bank of India has allowed lenders/banks to transfer of 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.
• 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

Points to remember:

1. amount of fraud loans for FY19, FY20 and FY21.

Source: Business Standard