1.54 lakh Crore Bad Loans Write-off

IAS Prelims 2023

Public sector banks (PSBs) have written off Rs 1.54 lakh crore of bad loans between April 2013 and June 2016.

PSBs are banks where a majority stake (i.e. more than 50 percent) is held by a government. The shares of these banks are listed on stock exchanges. There are a total of 27 PSBs in India [21 nationalised banks + 6 State Bank Group (SBI + 5 associates) ].

During 2013-14, all PSBs had written off Rs 34,409 crore non-performing assets (NPAs).

The amount increased further to Rs 49,018 crore in the following year.

Banks wrote off NPAs of Rs 56,012 crore during 2015-16.

The Rs 15,163 crore write-off of NPAs has taken place during the first quarter of the current fiscal.

There were 661 NPA accounts above Rs 100 crore amounting to Rs 3.78 lakh crore from PSBs as on March 31, 2016.

As on September 30, gross NPAs of public sector banks rose to Rs 6,30,323 crore as against Rs 5,50,346 crore by June end. This works out to an increase of Rs 79,977 crore on a quarter-on-quarter basis.

The government has taken sector-specific measures (infrastructure, power, road textiles, steel, etc) where the incidence of NPAs is high.

Measures like enactment of the Insolvency and Bankruptcy Code (IBC) and amendment of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI) and the Recovery of Debt due to Banks and Financial Institutions (RDDBFI) Act aimed at improving resolution or recovery of bank loans.

The RBI has come out with a number of tools such as corporate debt restructuring, formation of Joint Lenders’ Forum, strategic debt restructuring scheme and sustainable structuring of stressed assets to fight NPAs.