The Hindu Business Line : 12.7 pc priority sector loans are NPAs: Economic Survey

THANKS to the tightening up of provisioning norms over the years, there is far greater transparency today about NPAs of banks than there was a decade ago.

Even so, there is a great deal of information that is not in the public domain. No one, for instance, has a clue about which companies account for, say, the top 100 NPAs ranked in terms of size, and what proportion of total NPAs are accounted for by these companies.

Similarly, precious little is known about the incidence of NPAs according to sectors; either sectors of industry and business, or more generally according to the distribution loans to and outside the priority sectors. It is however now possible to shed some light on the last of these.

The latest Economic Survey explicitly states that in 2003-4, "advances to non-priority sectors accounted for bulk of the outstanding NPAs in the case of public sector banks, 51.24 per cent of the total." The accompanying table in the Survey gives gross NPAs for public sector banks as Rs 51,538 crore, and states that these accounted for 7.2 per cent of gross advances in 2003-4. Since we know that priority sector advances accounted for 30 per cent of gross advances, a few quick calculations are all that are needed to arrive at the percentage of NPAs to gross advances in the priority and non-priority sectors. It turns out from these calculations that gross NPAs in the priority sector accounted for as much as 12.7 per cent of gross advances in 2003-4, as against NPAs of 5.7 per cent in the case of advances to non-priority sectors.

To appreciate the full significance of the problem, these figures have to be read bearing in mind that the current surge of interest by foreign banks in acquiring NPAs from public sector banks is limited to the acquisition of bulk NPAs, rather than the acquisition of a portfolio consisting of a large number of individually small NPAs.

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12.7 pc priority sector loans are NPAs: Economic Survey

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