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Gross NPA of PSBs Strikes 9.83% in FY16 and 11.82% by September 2016

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As per the data released by the Minister of State for Finance Santosh Gangwar in the Lok Sabha on February 3, 2017, Public Sector Banks (PSBs) witnessed a bad loan at 9.83 percent of the gross advances in the financial year (FY) 2015-16, while the bad loans for Private sector banks were capped at 2.70 percent of the advances.

Main Highlights of the Report

For the FY16, PSBs had gross advances of Rs. 51,04,915 crore. Out of this Rs 5,02,068 crore was categorized as gross non-performing assets (GNPA) which accounts for 9.83 percent.

  • In case of the Private sector bank of the total Rs 17,91,681 crore gross advances made in FY16, only Rs 48,380 crore were gross NPA means only 2.70 percent.
  • Further, till September 2016, PSBs gross NPA hiked to Rs 5,89,502 crore which is 11.82 percent of the total advances made till date. Besides, when the gross NPAs were NPAcombined with the restructured advances, they rose to 15.88 percent as on September 30, 2016.
  • An amount of Rs. 59,547 crore was written-off at the end of March 2016 by PSBs while for in FY 17 till September end, write-offs stood at Rs 25,825 crore.

Measures taken to improve Bad Loan Recovery

Government has already introduced Indradhanush Plan in 2015 to revamp public sector banks.The government is taking several sector specific measures including infrastructure, power, road, textile, steel to deal with high NPA issues,

  • Besides, the government has also enacted the Insolvency and Bankruptcy Code (IBC).
  • Two Acts including Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI) and The Recovery of Debts due to Banks & Financial Institutions (RDDBFI) Act have been amended to improve recovery of bank loans.
  • Among other things, the centre has made an action plan which includes appointment of the Bank Board Bureau, capitalisation, de-stressing of PSBs, empowerment, a framework of accountability, governance reforms.

What is an NPA?

A non performing asset (NPA) is a loan or advance for which the principal or interest payment remained overdue for a period of 90 days.