The per capita bank credit was Rs 37,802 in FY12, which has shot up to Rs 73,637 in FY19.
An average loan taken by every Indian has doubled in the last seven years. The per capita bank credit was Rs 37,802 in FY12, which has shot up to Rs 73,637 in FY19, according to the data provided by Anurag Singh Thakur, MoS, Ministry of Finance, in a reply to a question in Lok Sabha today. Various measures have been undertaken recently to improve the credit growth in the country, which include Partial Credit Guarantee Scheme by PSU banks, one-time restructuring schemes, external benchmarking, etc, the minister added. On top of it, an additional deduction on interest paid on loans for the purchase of houses valued up to Rs 45 lakh has been allowed and measures have been taken to incentivize credit to specific productive sectors, he further added.
While the increased per capita bank credit has given banks an opportunity to increase their business, it has also exposed the banking sector to a risk of NPAs. The primary reasons for the spurt in stressed assets are aggressive lending practices, wilful default, loan frauds, corruption, and economic slowdown, according to RBI. Asset Quality Review (AQR) initiated in 2015 for clean and fully provisioned bank balance-sheets revealed a high incidence of non-performing assets (NPAs).
Meanwhile, the aggregate gross advances of all banks had ballooned nearly three folds from Rs 23.44 lakh crores in FY08 to Rs 65.76 lakh crores in FY14, according to RBI data on global operations. However, now the situation of NPAs is gradually improving with gross NPAs of public and private sector banks declining by Rs 89,572 crores by December 2019, after peaking by the end of March 2018. The banks have also made a record recovery of Rs 2.68 lakh crore in the previous fiscal and in the first three quarters of the current fiscal.