NPAs in PSU banks have crossed Rs.8.5 lakh crore, says MoS

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According to Minister of State for Finance Shiv Pratap Shukla, non-performing assets (NPA) of public sector banks in the country have crossed Rs.8.5 lakh crore in the first half of the current fiscal year. He also added that the Reserve Bank of India (RBI) has provided directions on resolving NPAs of public sector banks.

NPAs

In a written reply to the Lok Sabha, Shukla mentioned that the provisions for NPA in public sector banks have been increased to 9.5%. The reply also provided an answer for another question stating that the government is not considering the withdrawal of cheque books in public sector banks.

RBI has earlier asked banks to refer 12 big cases of bad loans in order to initiate insolvency proceedings as per the newly formed Insolvency and Bankruptcy Code of 2016. These 12 accounts included some of the major corporates in India, and they contributed to nearly 25% of the bad loans in PSU banks.

RBI has asked banks to resolve these bad loans within six months or initiate insolvency proceedings as per the code. The RBI has also initiated a few other proceedings to resolve the NPAs of these banks. For instance, companies with bad loans are now banned from bidding on their own stressed assets.

The surge in NPAs has been alarming in the last few years. It is one of the major points of discussion at the PSB Manthan. By the end of the first quarter of 2017, NPAs have crossed Rs.7 lakh crore. The pile up of NPAs is a big issue for the government and public sector banks in the country.

NPAs have caused many banks to struggle with their capital adequacy. To help these banks, the government recently announced a capital infusion plan for Rs.2.11 lakh crore. This recapitalisation is expected to boost credit growth in the country and increase the overall income of public sector banks.

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