NPA and bad loans of public sector banks

There are 21 Public Sector Banks (PSB). On September 2017 the total Gross Non Performing Assets (GNPA) of these banks stood at Rs 7.33 Lakh Crores. Out of this amount, an amount of Rs 1.01 Lakhs has been termed as wilful default. Public sector banks are more stressed than their private sector counterparts. According to CARE Ratings’ Analysis the PSBs figure among the top 20 banks with the highest gross non-performing asset (GNPA) ratios.

Wilful defaulter is one who has element of malfeasance and has reneged on the agreement of usage of borrowed fund or has not paid despite having capacity to pay. Following chart gives data of affected banks:-

It is difficult to recover the loan from willful defaulters because money has been siphoned off the books of account and the defaulters are fighting court cases. Some of the willful defaulters are Kingfisher Airlines, Zoom Developers, Varun Industries and Winsome Diamonds. The leading corporate houses account for approximately 77% of total Gross NPA from domestic operation of Indian banks.

Eight PSBs banks namely IDBI Bank, Indian Overseas Bank, UCO Bank, Bank of Maharashtra, Central Bank of India, Dena Bank, United Bank of India, and Corporation Bank had a GNPA ratio of over 15 per cent as of June 2017.

State Bank of India (SBI) accounted for the largest share of around 22.7 % (Rs 1,88,068 Crore) in the total NPAs of 38 banks (aggregating Rs 8,29,338 Crore) as of June-end 2017. Among the top 20 banks, according to GNPAs in absolute terms, 18 are PSBs and only two are private sector banks. The private sector banks are ICICI Bank and Axis Bank. These two private sector banks have a combined share of 7.9 per cent in total NPAs.

Article by Col P Chandra (Retd)