Bank's Bad Loans


Recovery to gain speed


Bad loan menace

Public sector banks recover fast

 Public sector banks have shown significant growth in their recovery from bad loan accounts in the first half of the current financial year. The second is expected to show even more significant improvement.

 

Commercial banks’ rising non-performing asset (NPAs) is one of the major concerns. As at the end of the first half of the current financial year (NPAs) of public sector banks (PSBs) stood at Rs 5,89,502 crore, which is equivalent of 11.82% of their gross assets.

But banks have tightened their recovery mechanism, resulting in speedy recovery in the year 2015 and 2016. The momentum still continuous.  In the financial year 2015 the public sector banks recovered an aggregate Rs 42542 crore and in the first half the collective recovery was to the tune of Rs 39,986 crore.

The government also has taken sector specific measures for recovery from the infrastructure, power, road, textiles, steel etc.) where incidence of NPA is reportedly too high. To boost the banks’ recovery measures the government has enacted and amended the insolvency and bankruptcy code (IBC) Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI) and the Recovery of Debts due to Banks and Financial Institutions (RDDBFI). Besides these, the six new debt recovery tribunals (DRTs) have been established for improving the recovery process. RBI has provided a number of tools like Corporate Debt Restructuring (CDR), Formation of Joint Lenders’ Forum (JLF), Flexible Structuring for long term project loans to Infrastructure and Core industries (5/25 Scheme), Strategic Debt Restructuring Scheme (SDR) and Sustainable Structuring of Stressed Assets (S4A) to help banks improve their recovery process.

 

NPA REDUCTION DATA FOR PUBLIC SECTOR BANKS

(Rs. In Cr)

Bank Name

Total reduction in NPAs- due to actual recoveries during the FY

 

2015

2016

Allahabad Bank

827

2,465

Andhra Bank

1,156

729

Bank of Baroda

1,295

1,347

Bank of India

2,798

3,153

Bank of Maharashtra

430

645

Bharatiya Mahila Bank Ltd.

-

-

Canara Bank

1,871

1,260

Central Bank of India

3,430

3,087

Corporation Bank

318

477

Dena Bank

595

728

IDBI Bank Limited

1,149

840

Indian Bank

525

513

Indian Overseas Bank

2,342

1,784

Oriental Bank of Commerce

1,010

1,149

Punjab & Sind Bank

190

217

Punjab National Bank

4,220

6,001

Syndicate Bank

1,071

1,248

UCO Bank

1,629

1,369

Union Bank of India

1,125

844

United Bank of India

1,237

1,095

Vijaya Bank

646

288

Total of nationalised banks

27,864

29,239

State Bank of Bikaner & Jaipur

575

756

State Bank of Hyderabad

1,981

2,503

State Bank of India

8,500

4,119

State Bank of Mysore

1,014

490

State Bank of Patiala

1,411

1,405

State Bank of Travancore

1,197

1,474

Total SBI Group

14,678

10,747

Total public sector banks

42,542

39,986

Source: RBI