The public sector banks (PSBs) have witnessed an exponential rise in loan recovery in the current financial year. Helped by the economy picking up pace and fear of action by the banks, PSBs have managed to recover more than Rs 36,500 crore of bad debts and assets during the first quarter of the ongoing fiscal year. The sign is really encouraging and the amount is almost half of the recoveries in the entire FY18.
In the last financial year, the banks have managed to recover a bad debt of Rs 74,562 crore. The recovery amount is likely to double in 2017-18 if the banks manage to keep up the same pace.
Two public lenders, Punjab National Bank and Indian Bank, reported the recovery of non-performing asset (NPA) in the first quarter bettering the figure on the entire financial year 2017-18. Moreover, other major banks such as State bank of India (SBI), Bank of Baroda (BoB) and Bank of India (BoI) also witnessed a healthy improvement in loan recovery.
The amount of bad debt recovered by SBI in the Q1 of FY19 was almost three-and-a-half times higher at Rs 2,426 crore as against the last financial year. On the other hand, BoB and BoI managed to recover twice the loan they had recovered in Q1 FY18.
The Indian banking system, especially the PSBs, are reeling under the pressure of bad debts which is hampering the credit availability in the market. However, the numbers for the latest quarter show that the amount of bad loan in the banking system has decreased for the first time in the last five quarters. The bad loan stood at Rs 10 lakh crore in June quarter as against Rs 10.25 lakh crore in March.
Highlighting the fact that the banking sector in on the path of recovery, financial services secretary Rajeev Kumar tweeted, "Resurgent PSBs (public sector banks), the nation's growth engines, after cleaning put worst behind."
The government is taking a series of measures to overhaul the degrading state of the banking sector by policy formulation and stricter implementation to empower banks to push the borrowers to repay their debts.
