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What are NPAs?

NPAs
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
Gross NPAs could rise to 6%: India Ratings
  • 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

Fact
Information

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
Rajan proposes new loans for NPA accounts
  • 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
NPA recovery would take time: Moody's
  • 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
Bank NPAs remain at unacceptable level: Jaitley
  • 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
Several reasons for growing NPAs: Jaitley
  • 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
Bank consolidation may be stalled due to Non-Performing Assets
  • 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.