'NPAs down to Rs 7.7 trn due to transparent recognition of stressed assets'

Gross NPAs have reduced to Rs 7.73 lakh crore as of December 31, 2021, against Rs 10.36 lakh crore as of March 31, 2018, due to transparent recognition of stressed assets, the government informed the Rajya Sabha on Tuesday.

Finance Minister Nirmala Sitharaman said as per inputs received from the Reserve Bank of India (RBI), the country-wise ratio of non-performing loans to total gross loans is available on the website of the International Monetary Fund under its Finance Sound Indicator database.

"It is observed that the said ratio for India compared adversely with those of US, UK and China, and information in respect of Japan is not available," the minister said.

"Primarily as a result of transparent recognition of stressed assets, gross NPAs of SCBs peaked at Rs 10,36,187 crore (gross NPA ratio of 11.8 per cent) as on March 31, 2018, from Rs 3,23,464 crore (Gross NPA ratio of 4.28 per cent) as on March 31, 2015, and as a result of government's strategy of recognition, resolution, recapitalisation and reforms, have since declined to Rs 8,35,051 crore (Gross NPA ratio of 7.33 per cent) as on March 31, 2021, and further to Rs 7,73,470 crore (Gross NPA ratio of 6.39 per cent) as on December 31, 2021," Sitharaman said in her written reply.

She also disclosed that as per the Reserve Bank of India (RBI) data, aggregate gross advances of Scheduled Commercial Banks (SCBs) increased from Rs 25,03,431 crore as of March 31, 2008, to Rs 68,75,748 crore as on March 31, 2014.

As per RBI inputs, aggressive lending practices during this period along with wilful default/loan frauds/corruption in some cases, economic slowdown etc were observed to be primary reasons for the spurt in the stressed assets of SCBs and Asset Quality Review (AQR) initiated in 2015 for clean and fully provisional bank balance-sheets revealed high incidence of non-performing assets (NPAs), she said.

As a result of AQR and subsequent transparent recognition by banks, stressed accounts were reclassified as NPAs and expected losses on stressed loans, not provided for earlier under flexibility given to restructured loans, were provided for, the minister also said.

"Comprehensive steps have been taken by the government to deter defaulters, and for effective action against and to recover the default amount from them, which enabled SCBs to recover Rs 8,19,892 crore during the last seven financial years and up to December 2021," she said.

Replying to a supplementary from a member in the house, Sitharaman said "Whenever issues of resolution which are "suspect", there are times when the resolution providers are being asked to review the process and only then finalised."

"When it is leading to questionable resolutions, there are always avenues available to banks to go to court and say that this may not be the best resolution available. Banks have gone in recent times to court to say that the resolution is not acceptable. Banks have gone questioning the levels to which the banks have been asked to let go haircuts and appealing against resolutions," she said.

The minister said when such a thing happens, the resolution professionals' credibility gets questionable after this and fresh cases are not given to them and there are checks and balances that are invoked.

To another supplementary, Minister of State for Finance Bhagwat Kishanrao Karad said, "The banks do not differentiate between big loans and small loans and a bank always works on how to recover its loans. There is nothing specific for farmers.