RBI governor Raghuram Rajan has said that
NPAs must be curbed before the problem becomes alarming.
Public sector banks (PSBs) have registered a massive
increase in non-performing assets (NPAs). Gross NPAs of PSBs stood at Rs 112,489 crore in March 2012 rising to Rs 155,890 crore in March 2013 and all- time high of Rs 182,829 crore by June 2013. The Standing Committee on Finance is all set to examine the reasons for high NPAS in PSBs, including bigger banks like
State Bank of India (SBI) and Punjab National Bank (PNB).
The Centre in its reply to the Standing Committee accepted that NPAS have risen. "The major reasons are sluggishness in the domestic growth during the recent past, slowdown in recovery in the global economy and continuing uncertainty in the global markets leading to lower exports of various products like textiles, engineering goods, leather, gems, external factors, including the ban in mining projects, delay in environmental related permits affecting power, iron and steel sector, volatility in prices of raw material and the shortage in availability of power having impact on the operations in the textiles, infrastructure and iron & steel," the government said.
The data, shared with the Standing Committee, also shows that NPAs in the corporate sector are far higher than those in the priority or agriculture sector.
The government further said, "The asset quality of PSBs priority sector exposure recorded deterioration as gross NPAs in the sector increased by Rs 5,729 crore, or 7.7 per cent, during Quarter 2 (Q2) FY14 compared to Q1 level.
Within the priority sector, incremental NPAs were more in respect to micro small and medium enterprises followed by agriculture." On the whole, gross NPA ratio and net NPA ratio of PSBs increased from 4.59 per cent and 2.60 per cent as on June 30, 2013, to 4.85 per cent and 2.64 per cent at end of September 2013. "As regard to restructured standard advances relative to gross advances, the ratio has declined to 6.96 per cent in September 2013 from 7.34 per cent a quarter ago.
Despite the decline, ratio stood quiet high and in tandem with rise in gross NPAs reflected visible asset quality strain embedded in the loan portfolios of PSBs," the background note to the Committee stated.
As regards the SBI, its gross NPAs have risen from Rs 23,074 crore in March 2011 to Rs 57,636 crore by June 2013. Same is the case with the PNB, whose gross NPAs stood at Rs 4,371 crore in March 2011 rising to Rs 14,860 crore by June 2013.
Centre in its background note to the Committee argued that the steps it took to recover NPAs has given good results. "The recovery of NPA s by Public Sector Banks has increased from Rs 9,911 crore (March 2010) to Rs 14,122 crore (March 2011) and to Rs 17,272 crore by March 2012 to Rs 20,050 crore by March 2013," the background note stated.
Nonetheless, the difference between the Standing Committee and the Centre remains on the disclosure of names of wilful defaulters and their NPAs to the Committee.
Earlier, the Committee had asked as to how disclosure is not possible on the grounds of public interest and efficient functioning of the public sector banks.
Courtesy: Mail Today
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