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The amount of bad loans written off or restructured by the public sector banks (PSB) has more than doubled in the past three years ending March 2014 to Rs 42,447 crore.
The rise in bad loans is being attributed to a slowdown in the economy which slipped to below five per cent in the two consecutive financial years - 2012-13 and 2013-14.
The loans written off by PSBs soared from Rs 20,752 crore in 2011-12 to Rs 32,992 crore in 2012-13 and further to Rs 42,447 crore in 2013-14, according to Reserve Bank of India (RBI) data. RBI Governor Raghuram Rajan has been highlighting the problem of rising bad loans in the banking sector.
He had earlier said "The total write-off of loans made by the commercial banks in the past five years is over Rs 1.61 lakh-crore, which is about 1.3 per cent of GDP (gross domestic product)... To put this amount in perspective - (it) would have allowed 1.5 million of poorest children to get a full university degree from the top private universities in the country, all expenses paid."
RBI has recently issued a comprehensive framework for revitalising distressed assets.
The framework outlines the corrective action plan that will incentivise early identification of problem cases, timely restructuring of accounts which are considered to be viable and taking prompt steps by banks for recovery or sale of unviable accounts.
Public sector banks accounted for over 90 per cent of the total non-performing assets (NPAs) in 2013-14.
Of Rs 2.40 lakh-crore gross non-performing assets reported by the Indian banking system in 2013-14, Rs 2.16 lakh-crore was accounted for by the public sector banks.
Private sector banks had gross non-performing assets of Rs 22,738 crore as of March 31, 2014.
