"PSU banks pile up bad debts"

Discussion in 'Economy & Infrastructure' started by Singh, May 25, 2011.

  1. Singh

    Singh Phat Cat Administrator

    Feb 23, 2009
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    NEW DELHI: It isn't just State Bank of India that has large pools of bad debt, other public sector lenders too face a similar situation with the pressure arising from priority sector – the government's pet project.

    According to data compiled by the finance ministry, in 2009-10, at least 41% of net credit of state-owned lenders of Rs 8.65 lakh crore was extended to priority sectors such as agriculture, small-scale industry (SSI) and to the weaker sections.

    Highest non-performing assets (NPAs) were reported from the agriculture and SSI, while comparatively smaller proportion of loans to the weaker sections turned bad.

    During April-December 2010, at least Rs 12,733 crore of bad debt came from the farm sector alone, a 70% rise over the year ago. And this came on top of the 2009-10 performance, when Rs 8,330 crore of farm loans had turned sticky. This represented a 41% increase over 2008-09.

    Slippages in SSI too are high.

    According to finance ministry data, during the first nine months of 2010-11, NPAs rose almost 80% from around Rs 7,000 crore to Rs 12,500 crore. Among other priority sectors, loans granted to weaker sections showed improvement in asset quality. As compared to Rs 11,626 crore of bad debts in 2009, the gross NPAs came down to Rs 10,981 crore in 2010, a decrease of around 5.5%.

    During a performance review in Mumbai last week, finance minister Pranab Mukherjee expressed concern at the rising NPA level and has asked banks to spruce up their balance sheets and carry out better due diligence during lending. However, his concern doesn't match with his Budget announcements where year-after-year he has been forcing these government banks to increase credit to the sector which still has to mature.

    This year, the FM has asked public sector banks (PSBs) to achieve a target of 15% of total priority sector loans to minority communities. For the agriculture sector, he has raised the target by Rs 1 lakh crore from Rs 3.75 lakh crore last year to Rs 4.75 lakh crore in 2011-12.

    PSU banks pile up bad debts - Times Of India

    Well done Congress.. :rolleyes:

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