The prolonged and steep economic downturn, accompanied by high interest rates, has led to a sharp deterioration in asset quality for the banking sector and increased the pressure of NPAs. The percentage of gross non-performing assets (GNPAs) for the banking sector is expected to worsen from 3.9 percent of advances in fiscal 2013-14 to about 4-4.2 percent in 2014-15, Moody’s analyst ICRA has said in a report.
Bad and restructured loans crossed 10 percent of all loans in mid-fiscal 2013-14 and are expected to touch the 15 percent mark by the end of the financial year 2014-15. During the April-December period last year, the banks had recovered Rs.18,933 crore, which is only about 20 percent of the total non-performing assets of about Rs.192,000 crore in the banking system.
Earlier, Finance Minister Arun Jaitley had said that banks are taking a number of steps against wilful defaulters to recover loans as there has been a major spurt in NPAs. “It is normal for the banks to have 2-3 percent of NPA. But in the last 2-3 years, the NPA has increased substantially and gone up to 6 percent. Stress assets have also increased,” Jaitley had told the Lok Sabha during the question hour. (IANS)