The Finance Standing Committee of Parliament, which has recommended a forensic audit of all bad loans, has painted an alarming picture of the gross non-performing assets of public sector banks.
According to the panel’s report, which was adopted on Friday, the gross NPAs of scheduled commercial banks, especially public sector banks, have increased in recent years.
In September 2015, the total GNPAs of PSBs stood at ₹297, 571 crore while the gross advances for the same period were at ₹46,49,843 crore, meaning that the GNPA ratio was 6.15 per cent. This, according to the report, is a steady increase.
In September 2014, the GNPAs were at ₹240,986 crore and the gross advances were ₹45,57,053 crore. The ratio was 5.29 per cent. The latest GNPA figures of the private banks were not available with the panel.
The report mentions that on account of good economic conditions, the GNPA ratio of PSBs steadily declined from 13.11 per cent in 2000-01 to 2.10 per cent in 2008-09 and the GNPA ratio of scheduled commercial banks steadily declined from 12.04 per cent to 2.45 per cent.
“NPAs have risen to 3.84 per cent as on March 2013, 4.72 per cent as on March 2014, 5.29 per cent as on September 2014 and further to 5.64 per cent (provisional) as on December 2014 in respect of SCBs due to sluggishness in the domestic growth during the recent past, 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 PSBs continue to be under stress on account of their past lending,” the report noted.
RBI Governor Raghuram Rajan told the panel in 2014 that all the optimistic projections about growth came down substantially both in the world and domestically and it was one reason for the problems.
Rajan’s take “NPAs are more focused in the public sector banking system. That is not necessarily only because the public sector banking system has made more mistakes than the private sector system. The private sector system did not go into some of these large projects like infrastructure. Moreover, the private sector system also knows how to get out before the public sector system,” Rajan was quoted as saying in the report.