What are NPAs?
- An asset is tagged as a non-performing asset when it stops generating income for the lender.
- It is defined as a credit facility in respect of which the interest and/or installment of principal has remained overdue for a specified period of time.
- NPAs adversely affect the economy as the funds are locked up in bad projects instead of good ones.
Gross NPAs could rise to 6%: India Ratings
16 Jul 2015
- Credit rating agency India Ratings said that government-owned Indian bank's gross non-performing assets (GNPAs) could rise to around six per cent of the total.
- India Ratings said that though the NPA growth had decreased in 2014-15 but stress in some large corporate accounts could push the gross NPA ratio higher.
- Gross NPAs had gone upto 5.2% in March 2015 from 4.7% in March 2014.
Gross NPA of banks
The gross NPAs of 19 banks touched a high of ₹2.6 lakh crore in September 2015. It was ₹2.3 lakh crore in March 2015.
Rajan proposes new loans for NPA accounts
21 Aug 2015
- Speaking at the SBI Banking Conclave, RBI Governor Raghuram Rajan said that fresh loans should be provided to stalled projects so that they can get back on track.
- He said that it was the best way to get rid of non-performing assets (NPAs).
- However, SBI chairman Arundhati Bhattacharya rejected the proposal saying the banks do not have any incentive for doing so.
NPA recovery would take time: Moody's
2 Nov 2015
- The US-based credit rating agency Moody's said that India's banking system was in a better shape but NPA recovery would not be quick.
- Srikanth Vadlamani, Vice President of Moody's, said that private sector banks exposed to stressed sectors like power had problems in recognizing NPAs.
- He said that assets like power plants did not have any real estate which could be sold or recovered.
Bank NPAs remain at unacceptable level: Jaitley
24 Nov 2015
- Following a meeting with chiefs of state-run banks, Finance Minister Arun Jaitley said that the Non-Performing Assets (NPAs) of Indian banks continued to remain at unacceptable levels.
- He said that this has happened partly due to stress in certain sectors of the economy to which banks had large exposure.
- He also said that NPAs of few banks were partly due to wilful defaulters.
Several reasons for growing NPAs: Jaitley
24 Nov 2015
- Finance minister Arun Jaitley said that stress in the power sector of the country was one of the reasons for growing NPAs.
- He also said that disputes in the roads sectors had stressed the banks.
- He mentioned that problems related to banks would be separately addressed by the Revenue department.
- He hoped that steel sector would soon help reduce the stress on banks.
Bank consolidation may be stalled due to Non-Performing Assets
05 Aug 2016
- Until the problem of Non-Performing Assets (NPAs) is solved by the public sector banks, the consolidation of banks is likely to be kept on hold.
- Former Minister of State for Finance, Jayant Sinha, in May'16 said that the Indian Government was considering having 8-10 PSU banks against 27.
- The Government is looking for various options and experiments in order to solve this issue.
India's banks in better shape but NPA recovery will be prolonged: Moody's - timesofindia-economictimes
PC: 'Arun Jaitley at the India Economic Summit 2010 cropped' by World Economic Forum from Cologny, Switzerland - Arun Jaitley. Licensed under CC BY-SA 2.0 via Wikimedia Commons
PC: 'Raghuram Rajan, IMF 69MS040421048l' by International Monetary Fund. Licensed under Public Domain via Wikimedia Commons