Despite a series of steps taken by the government to contain non-performing assets (NPAs), the banks are unable to tackle the NPA woes looming over them, as the situation gets worse with each passing quarter. Banks have written off loans worth a total of Rs 2.46 lakh crore in the last five years, Indian Express reported quoting finance ministry data.
The gross NPA of banks has risen to 9.6 percent (of total advances) in March 2017, from 9.2 per cent in September 2016, as per the RBI data. The stressed advances ratio declined marginally from 12.3 percent to 12 percent due to fall in restructured standard advances, especially in agriculture, services and retail sectors, IE reported.
In contrast to the write off amount of Rs 27,231 crore in 2012-13, when banks earned combined net profit of Rs 45,849 crore, the amount of loans written off in 2016-17 trebled to Rs 81,683 crore when the banks combined profits were a mere Rs 474 crore.
In the past couple of years, PSBs incurred combined net losses of over Rs 19,529 crore, even after government's capital infusion during these two years, at Rs 47,915 crore, was the highest in the last decade.
Last year the government enacted the Insolvency and Bankruptcy Code (IBC) and earlier this year empowered the Reserve Bank of India (RBI) to direct banks to initiate insolvency proceedings against large loan defaulters. The RBI has recently directed banks to refer 12 large NPA cases for resolution under the IBC.
As per a recent analysis by rating agency Crisil, banks are likely to take a haircut of 60 percent, worth Rs 2.40 lakh crore, to settle 50 large stressed assets with a debt of Rs 4 lakh crore.
