Gross non-performing assets (NPAs) of banks declined marginally to 9.8 per cent at the end of September 30 over the previous quarter, government said today. “As per Reserve Bank of India (RBI) data, combined Gross NPAs of Scheduled Commercial Banks (SCBs) have declined marginally from 10 per cent as on June 30, 2017 to 9.8 per cent as on September 30, 2017,” Minister of State for Finance Shiv Pratap Shukla said in a written reply to the Lok Sabha. Replying to another question, Shukla said that as per Financial Stability Report (FSR) released by RBI in December 2017, the gross NPAs (GNPAs) of SCBs increased to 10.2 per cent in September 2017 compared to 9.6 per cent in March 2017. Further, as per FSR, macro stress test for credit risk indicates that under the baseline scenario, the GNPA ratio of the banking sector may increase to 10.8 per cent by March 2018, he said. The problem of NPAs or bad loans of banks has been addressed holistically through transparent and realistic recognition of NPAs, provision for expected losses and unprecedented recapitalisation, and putting in place a clean recovery system, he said. Asset Quality Review initiated by RBI in 2015, and subsequent transparent recognition by banks revealed high NPAs, which have impacted balance-sheets of several Public Sector Banks (PSBs).
For strengthening PSB balance-sheets, under Indradhanush plan, Government provided for Rs 70,000 crore till 2018-19, as a result of which despite high NPA and consequential provisioning, banks were successful in complying with capital adequacy norms, he said. Further, he said, with the object of increasing credit off-take and promoting creation of jobs, in October 2017 Government announced, and has since initiated, recapitalisation of PSBs by Rs 2,11,000 crore within two financial years to make banks weakened by NPAs strong.
In addition, he said, to enable effective action in respect of defaulters, Insolvency and Bankruptcy Code, 2016 was enacted, which provides for timebound resolution of stressed assets. Cases have been instituted under the Code in the National Company Law Tribunal (NCLT) in respect of the 12 largest defaulters, amounting to about 25 per cent of the NPAs of the entire banking system, he said. To safeguard against the misuse of the legal process, he said, wilful defaulters and persons associated with NPA accounts have been barred from participating in the process under way in NCLT.