Public sector banks’ gross bad debt jumped over 51 per cent to a whopping Rs 1,03,891 crore in 2011, the Minister of State for Finance Mr Namo Narain Meena said today.
Replying to supplementaries during the Question Hour in the Rajya Sabha, he said the gross Non-Performing Assets (NPAs) of public sector banks has increased from Rs 68,597.09 crore at December 2010 end, to Rs 103,891.27 crore as on December 2011.
“NPA increase is marginal... not usual,” he said. “Banks have been instructed to see how NPAs can be reduced.”
Mr Meena said some of the loans to sectors like power, steel, MSME and aviation have gone bad or declared NPA.
Aviation sector, he said, had an outstanding of Rs 39,000 crore, of which Rs 741 crore was NPA. Similarly, power companies had a total outstanding of Rs 1,21,000 crore, of which overdue amount is Rs 446 crore.
“The gross NPAs of public sector banks, in terms of percentage of Gross Advances, have increased from 2.27 per cent to 3.18 per cent,” he said.
Listing out the reasons for the increase, he said switching over to system-based recognisation of NPA by most of the public sector banks during June-September 2011 and increase in interest rates and slowing economic growth had adversely impinged on the repayment capacity of all categories of borrowers, especially small and medium enterprises.
Keywords: bad debt,
Comments:
The increase in NPAs of PSU banks by 51% is something of very high order and there is no justification of whatsoever to make the tax payers to bear the loss of banks on account of NPAs. The basic cause of NPAs is the undisciplined behaviour of the borrowers and they need to be made to behave responsibly when they use deposits of banks which belong to public. It is something not digestible to bear the loss of Kingfisher like borrowers by public as the loss of PSU banks is ultimately borne by the GOVt using tax payers money. The only way to tackle NPAs of banks is to make the borrowers to compulsorily contribute towards a fund in banks books based on borrowers performance assessed on a continuous basis and build up this fund over a period to absorb the losses on account of NPAs. It is more sensible to make the borrowers particularly the bad ones to bear the cost of NPAs rather than by other stakeholders.Loss on account of NPAs has to be borne only by the bad borrowers.
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