Gross NPAs more than three times up in NDA rule, says RBI data

surya kiran

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https://www.newindianexpress.com/bu...mes-up-in-nda-rule-says-rbi-data-2248365.html

NEW DELHI: Gross Non-Performing Assets (NPAs) under the Narendra Modi-led NDA rule till last year is nearly 365 per cent more than what banks suffered due to bad loans during the UPA’s last six years, shows an analysis of RBI data.

Another trend noticed during the scrutiny of banking data of last 12 years is that the Public Sector Banks (PSBs) are writing-off massive amount of bad loans in the recent years — there was a 21-time jump when one looks at the data from 2008-14 to 2014-20.

The RBI data show that new gross NPAs of PSBs from 2014-15 to 2019-20 stood at nearly Rs 18.28 lakh crore, up from nearly Rs 5 lakh crore from 2008-09 to 2013-14 in the UPA rule.

Gross NPA is the term used by banks that refer to the sum of any unpaid debt, which is classified as non-performing loans.

PSBs wrote off bad loans worth Rs 6,83,388 crore in the last six years, a massive rise from Rs 32,109 crore incurred in the period from 2008 to 2014. Banks write off NPAs which are over four-year-old as part of their exercise to clean up balance-sheet.


“As borrowers of written-off loans continue to be liable for repayment and the process of recovery of dues in written-off loan accounts continues, write-off does not benefit the borrower,” Junior Finance Minister Anurag Thakur had informed Parliament in 2019.





The RBI data, however, show that the write-off of bad loans is up manifold during the recent years. Consider this: Rs 50,978 crore was written-off from the balance sheets of PSBs in 2014-15.

It, then, rose Rs 1,83,168 crore in 2018-19 and was marginally down to Rs 1,78,305 crore in 2019-20.

Similarly, banks continued to record high additions of fresh bad loans. From Rs 1,77,860 crore in 2014-15, NPAs rocketed to Rs 4,88,175 crore in 2017-18.

A slight improvement was marked in 2018-19 when the figure went down to Rs 2,10,530 crore. But, the trend was temporary as the addition in bad loans rose to Rs 2,38,464 crore in 2019-2020.

The Congress and other opposition parties have been critical of the Modi government for writing-off bad loans of big industrialists.

In December, Rajasthan CM Ashok Gehlot had written to the PM demanding a waiver of outstanding loans taken by farmers, saying while the BJP government waived off Rs 7.95 lakh crore of industrialists in its first tenure, it had not done anything for farmers.


Post the PNB-Nirav Modi fiasco, the government has advised PSBs to obtain a certified copy of the passport of the promoters, directors and other authorised signatories of companies availing of loan facilities of more than Rs 50 crore.

Congress critical of loan waiver to big bosses

The Congress and other opposition parties have been critical of the Modi government for writing-off bad loans of big industrialists. Rajasthan CM Ashok Gehlot had written to the PM demanding a waiver of loans taken by farmers.
 

Rajaraja Chola

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Very very concconcerning. 18 lakh crore is like 230B dollars. Could.have been used for common people, middle class, Msme loans etc or at least half of it.

Would like to know the profits earned by PSBs by giving out loans for more than 100Crore. Even if half of this amount had been saved, say 130B, it could have benefited our economy. GoI could have borrowed that money for social plans. So the corruption is still there in PSBs, which I thought the govt will take action on. Failing companies are still getting loans without due diligence while we middle.class are moved around here and there for housing loans or stuff.

Hope at least 25% of money is recovered.
 

another_armchair

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The write offs increased after Raghuram Rajan cracked the whip and stopped evergreening of loans under UPA era and ordered banks to clean up their books which in turn brought out more skeletons than anticipated.

All UPA legacy era dead bodies still tumbling out of the closet.
 

Rajaraja Chola

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The write offs increased after Raghuram Rajan cracked the whip and stopped evergreening of loans under UPA era and ordered banks to clean up their books which in turn brought out more skeletons than anticipated.

All UPA legacy era dead bodies still tumbling out of the closet.
It's been nearly 8 years and blaming UPA now is of no use.
 

another_armchair

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In the last four financial years, PSBs have recovered ₹3.59 lakh crore, including record ₹1.23 lakh crore in 2018-19.
Also, the aggregate gross advances of PSBs increased from ₹18.19 lakh crore by March 2008 to ₹52.16 lakh crore by end of March 2014, as per RBI data on global operations. (Who was ruling during this period when phone banking facilities were operational from 10 Janpath and Finance Ministry's office?)

The minister said that the primary reasons for spurt in stressed assets in banks have been due to aggressive lending practices, wilful default/loan frauds/corruption in some cases and economic slowdown.
That's an increase in PSB lending by nearly three times in just 6 years under UPA era.
 
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MSM

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Proving sceptics wrong, 2020-21 turned out to be the best in recent years for Indian banks in terms of their financial performance.

The pandemic-hit financial year was marked by a “discernible increase” in profitability, as banks’ income remained stable but expenditure declined, the Reserve Bank of India (RBI) observed in the annual Trends & Progress Report.

During the year, total income of banks remained stable, despite a marginal decline in the largest component — interest income — in an environment characterised by low credit offtake and interest rates, the report said. “The fall (interest income) was cushioned by a sizable increase in income from investments. Income from trading also accelerated, as banks booked profits on falling G-Sec yields,” it said.

Their expenditure contracted as interest expended on deposits and borrowing declined on account of moderation in interest rates and contraction in total borrowings.

“Profitability of banks, measured in terms of the spread between return on funds and cost of funds, improved with the decline in the latter exceeding that in the former,” the report said. Profitability or margin improvement was especially evident in the case of PSBs.

Asset quality

The declining trend in bad loans that started in 2018 continued during the pandemic year, which saw gross NPAs of scheduled commercial banks dropping to 7.3 per cent as of March 2021. It was 8.2 per cent in March 2020, and further to 6.9 per cent in September 2021.

“The provisional supervisory data suggests a further moderation in the ratio to 6.9 per cent by end-September 2021,” the report said.

The September figure of 6.9 per cent is the lowest in five years. The gross NPA of banks was 7.6 per cent in March 2016; it jumped from 4.6 per cent a year ago, mainly due to an asset quality review conducted by the central bank. Gross NPA peaked in March 2018 when it touched 11.5 per cent.

During 2020-21, the improvement in asset quality was driven by lower slippages, partly due to the asset classification standstill. With the decline in delinquent assets, their provision requirements also dropped and the net NPA ratio of public and private sector banks eased from the previous year.



“As observed since 2018, write-offs were the predominant recourse for lowering GNPA in 2020-21,” the RBI said. While asset quality improved, the standard restricted advances increased from 0.4 per cent in March 2020 to 0.8 per cent a year later.

Restructured standard advances further increased to 1.8 per cent at the end of September 2021 due to restructuring scheme 2.0 for retail loans and MSMEs which does not entail an asset classification downgrade, the banking regulator noted.

It has cautioned that incipient stress remains in the form of higher restructured advances. As a result, banks would need to bolster their capital positions to absorb potential stress, as well as to augment credit flow when policy support is phased out, the report said.

Loan growth recovery

Commercial banks’ loan growth -- which was decelerating for the past two years reflecting muted demand conditions and risk aversion -- showed signs of recovery in the first half of the current financial year.

“Within population groups, relatively higher credit growth in rural and semi-urban areas after the outbreak of Covid-19 is a bright spot. While PSBs (public sector banks) remained the major contributor of rural lending, given their reach and accessibility, the share of PVBs (private banks) has also climbed,” the report said, adding the credit-to-GDP ratio increased to a five-year high, “though still markedly lower than the G20 average.”

Deposit mobilisation in FY21 was the highest in seven years; it was mainly due to healthy growth in current and savings account deposits. The first half of the current financial year, however, saw some moderation, with normalisation in economic activities and a rise in inflation, the RBI added.

.
 

Rajaraja Chola

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UPA and UPA alone is responsible for the NPA mess.

Top PSB's almost went bankrupt because of UPA netas.
Probably yes, we can blame NPAs of UPA era at least till 2020. Not more than that. We need data of percentage of NPA of loans provided after NDA came to power. Then we will know.

And don't talk of corruption as it has suddenly disappeared. As if Govt employees has become Harichandra after Modi came to power. "Educated" bank officials made lakhs in the time of demonetisation.
 

ezsasa

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Probably yes, we can blame NPAs of UPA era at least till 2020. Not more than that. We need data of percentage of NPA of loans provided after NDA came to power. Then we will know.

And don't talk of corruption as it has suddenly disappeared. As if Govt employees has become Harichandra after Modi came to power. "Educated" bank officials made lakhs in the time of demonetisation.
interesting discussion, but since RBI changed the procedures to catch the NPA's early, UPA era definition of NPA and NDA era definition of NPA is different.

and because of IBC, even if there is an NPA , it won't be stuck in the books of banks like it used to during UPA.
 

VACKO

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interesting discussion, but since RBI changed the procedures to catch the NPA's early, UPA era definition of NPA and NDA era definition of NPA is different.

and because of IBC, even if there is an NPA , it won't be stuck in the books of banks like it used to during UPA.
Do these members even knew how much NPA were written up during the UPA before doing this.
 

another_armchair

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Probably yes, we can blame NPAs of UPA era at least till 2020. Not more than that. We need data of percentage of NPA of loans provided after NDA came to power. Then we will know.

And don't talk of corruption as it has suddenly disappeared. As if Govt employees has become Harichandra after Modi came to power. "Educated" bank officials made lakhs in the time of demonetisation.
Leave petty corruption at bank staff level out of the discussion for the time being.

The NPA mess was because of institutionalized corruption during UPA and it had blessings from the top.

The topic has been beaten to death.

Red flags were being raised about some PSB solvency behind closed corridors.

Please stop raising strawman arguments and move the fak on. Banks are on solid ground today because of some hard decisions taken by the RBI and the Govt. Pray it stays that way.
 
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VACKO

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Leave petty corruption at bank staff level out of the discussion for the time being.

The NPA mess was because of institutionalized corruption during UPA and it had blessings from the top.

The topic has been beaten to death.

Red flags were being raised about some PSB solvency in closed corridors.

Please stop raising strawman arguments and move the fak on. Banks are on solid ground today because of some hard decisions taken by the RBI and the Govt. Pray it stays that way.
No use they still belive them.
 

Rajaraja Chola

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interesting discussion, but since RBI changed the procedures to catch the NPA's early, UPA era definition of NPA and NDA era definition of NPA is different.

and because of IBC, even if there is an NPA , it won't be stuck in the books of banks like it used to during UPA.
The issue of NPA is just one part of the coin. The problem was decades in the making. When risk assessment team in major PSB were corrupt to.the core. Mallaya shouldn't have received the final trance of 6000 crore loan, but mostly the assessment teams who submit the report to the top officers was compromised.

These officers probably continue in their same capacity. There is no use if PM Modi or NS is honest when officials at the PSB aren't honest. So the question again comes. The percentage of loans provided by NDA and how much of it has become NPAs. Cleaning hasn't started to take place on the inside, yet.
 

Rajaraja Chola

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Leave petty corruption at bank staff level out of the discussion for the time being.

The NPA mess was because of institutionalized corruption during UPA and it had blessings from the top.

The topic has been beaten to death.

Red flags were being raised about some PSB solvency behind closed corridors.

Please stop raising strawman arguments and move the fak on. Banks are on solid ground today because of some hard decisions taken by the RBI and the Govt. Pray it stays that way.
Petty corruption. Do you think who provides the risk assessment for an loan requester? It's the same petty officers. Based on their report, loan is sanctioned or declined.

These aren't strawman argument. India has been beset with problems cos politicians we're seen as God like and people voted blindly even if the candidate was bad, just cos for the party symbol. Be it INC or BJD or DMK. If you are going to follow the same mistake wrt BJP, it's your own problem. Do not bring in your political biases for economic issues.
 

ezsasa

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So the question again comes. The percentage of loans provided by NDA and how much of it has become NPAs. Cleaning hasn't started to take place on the inside, yet.
if it is the case that you are not going to be convinced ,no matter what. then the onus is on you to provide the data to back your theory.
 

Rajaraja Chola

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if it is the case that you are not going to be convinced ,no matter what. then the onus is on you to provide the data to back your theory.
I have seen no data to be convinced. Not I am saying NDA govt is to be completely blamed. I am saying we need data.

I said I am not going to blindly trust any govt like some people here till I see results and improvements.
 

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