Difficulties faced by Banks due to NPAs
The details of Gross Non-Performing Assets (NPAs) of Public Sector Banks (PSBs), ICICI Bank and Axis Banks as on March- 2016 and Dec- 2016 are as under:
(Rs. in Crore)
|Public Sector Banks||5,02,068||6,06,911|
Source: RBI, (Data for Domestic Operations)
Non- Performing Assets (NPAs) of banks have increased due to slowdown in recovery in the global economy and continuing uncertainty in the global markets leading to lower exports of various products like textiles, engineering goods, leather, gems, etc. The PSB’s continue to be under stress on account of aggressive lending in the past.
ICICI bank has sold loans (gross) aggregating Rs.6,445 cr during the period April to December 2016 for a sale consideration of Rs.2,632 cr i.e. 84.55% of the net loan outstanding. Axis Bank had sold loans aggregating Rs.2,377 cr during the period April to December 2016 for a sale consideration of Rs.1,076 cr i.e. 45.27% of the loan outstanding.
Public Sector Banks (PSBs) take all efforts including sale of assets to recover their dues. The Loan resolution and recovery is guided by Reserve Bank of India (RBI) and Bank’s Board approved policy.
The regular recovery of bank loans help the banks in continuing their lending to the various category of borrowers as per their board approved policies. The bank lending to borrowers helps in increasing productivity, capacity building and private investments.