PSU and private banks in India wrote-off over Rs 6 lakh crore in bad loans in the last five years since 1 April 2014, including a substantial chunk from the loans made previously.
PSU and private banks in India wrote-off over Rs 6 lakh crore in bad loans in the last five years since 1 April 2014, including a substantial chunk from the loans made previously, Anurag Thakur, MoS, Ministry of Finance in Lok Sabha, said in a reply to a query in Lok Sabha. The NPAs written off by banks during April 2014-March 2019 include those stressed assets in which full provisioning has been made, Anurag Thakur said. However, the minister sought to blame aggressive lending practices of the past for the ballooning stressed assets in the country.
Anurag Thakur pointed out to the rise in banks’ gross advances 5-6 years before Narendra Modi’s BJP government came to power, saying that the gross advances of public and private sector banks dramatically shot up from around Rs 21 lakh crore in 2008 to around Rs 58 lakh crore in 2014.
Gross NPAs of public and private sectors banks in India skyrocketed by more than three folds in three years to FY18. As a result, public sector lenders posted an aggregate net loss of around Rs 2.4 lakh crore in FY18 and FY19 respectively, despite earning operating profits of more than Rs 1.5 lakh crore in both years, Finance Minister Nirmala Stharaman said in a reply to a query in Lok Sabha. Losses incurred by PSU banks are attributed to high provisions sliced off from their operating profits.
Staff accountability is also a major area, which has led to rising NPAs. State Bank of India (8,035), Central Bank of India (6,125), Corporation Bank (4,873) and Punjab National Bank (4,488) are the lenders where most numbers of staff are held accountable for NPAs, according to the data presented in Lok Sabha.
To maintain liquidity in the system, PSU banks have been recapitalised by Rs 3.12 lakh crore in the last four years. Condition of state-run banks has been improving as their NPAs have reduced by Rs 1 lakh crore in the last one year, Anurag Thakur said.