A Parliamentary panel has questioned the "tall claims" by the Finance Ministry that the steps taken by the government and the Reserve Bank of India (RBI) have resulted in year-on-year improvement in recovery of non-performing assets (NPAs) by the public sector banks (PSBs).
In its recent report, the standing committee on finance said it is alarmed to note that NPAs of PSBs registered substantial increase during the recent years. The committee, headed by Yashwant Sinha, pointed out that gross NPAs ballooned by 24 per cent to Rs 74,664 crore in 2011 from Rs 59,924 crore a year ago. This figure further scaled up by 36 per cent to Rs 1,17,262 crore in 2012.
It cited specific instances of banks as well--while the net NPA ratio of PSBs reached as high as 2.10 in December, 2012, the net NPA ratio of UCO Bank was 3.31, of Central Bank of India at 3.28, Punjab National Bank at 2.78, largest lender State Bank of India at 2.65.
It said equally disturbing fact was that compared to NPA in priority sector and agriculture , both NPA-corporate and NPAs other than priority sector went up by a whopping 190 per cent to Rs 83,490 crore and Rs 84,039 crore respectively between March, 2011 and December, 2012.
NPA corporate in SBI, PNB, UCO Bank, Indian Bank, Bank of Baroda, Andhra Bank and Bank of India rose manifold during the corresponding period.
"The rising NPAs eroded the balance sheet of PSBs. For instance, the net profit of SBI declined to Rs 3,398.06 crore in December, 2012 from Rs 3,658.14 crore in September, 2012," the committee said.
The panel expressed concern that durng the 2010-2012, the number of accounts of Gross NPAs above Rs one crore of PSBs rose around 80 per cent to 7,295 accounts from 4,095 accounts. Major increase in these accounts was reported in banks such as SBI, Bank of India, IDBI Bank, Indian Overseas Bank, PNB and Union Bank of India.
Another disturbing fact, the committee said is that percentage of restructured advances to gross advances ratio rose exponentially to 7.4 in December, 2012 from 5.7 in March, 2012.
In most PSBs, this percentage surpassed average 7.4. For example, it was 12.5 in Central Bank of India, 11.8 in Oriental Bank of India and PNB, 10.7 in Allabhabad Bank, 10.5 in Andhra Bank, 10.6 in Indian Bank and 10 in Indian Overseas Bank.
Though total reduction in NPAs improved by a paltry sum of Rs 7,000 crore to Rs 49,999.27 crore in March, 2012 from Rs 42,996.84 crore on March, 2011, the percentage of reduction in NPAs due to actual recovery remains stagnant at 35 per cent only and the compromise write offs and up-gradation of loan accounts together constitutes 65 per cent.
SBI was able to improve its actual recovery by a paltry sum of Rs 311 crore as against Rs 1,452 crore increase in write-offs in this period.
The committee asked the government and RBI to constitute a special NPA Management Cell at the highest level to review the write offs, upgradation of accounts and restructured advances. It wanted the government to submit a report on this within three months.
Meanwhile, the names of all willful defaulters-- companies and directors-- should be published appropriately, the committee said.
