Ministry of Finance Reports Declining Trend in Non-Performing Assets among Banks

Pankaj Chaudhary, Minister of State for Finance, presented a detailed report in the Rajya Sabha on the status of Non-Performing Assets (NPAs) held by Scheduled Commercial Banks (SCBs) over the past five years. The report highlights a declining trend in NPAs, contributing factors, and the measures taken for recovery.

In response to an unstarred question from Randeep Singh Surjewala, the Ministry of Finance, through Minister of State Pankaj Chaudhary, provided a comprehensive report on the status of Non-Performing Assets (NPAs) held by Scheduled Commercial Banks (SCBs) over the past five years. Presented in the Rajya Sabha, the report illuminated trends in NPAs, contributing factors to their increase, and recovery measures taken. According to Reserve Bank of India (RBI) data, gross NPAs (GNPA) of SCBs have shown a notable decline over the past five years.

As of March 31, 2020, GNPA was Rs 8,96,082 crore with a ratio of 8.21%. This decreased to Rs 8,35,051 crore (ratio of 7.33%) by March 31, 2021, and further to Rs 7,42,397 crore (ratio of 5.82%) by March 31, 2022. The trend continued, with GNPA reducing to Rs 5,71,544 crore (ratio of 3.87%) by March 31, 2023, and Rs 4,80,687 crore (ratio of 2.75%) by March 31, 2024 (provisional data). Despite fiscal reforms, the rise in NPAs can be attributed to economic downturns, poor credit assessment, wilful defaults, and regulatory lapses. External economic shocks like COVID-19 further strained businesses, exacerbating the NPA issue.

The Ministry of Finance also detailed the total value of NPAs written off and amounts recovered in the last five years. In FY 2019-20, Rs 2,34,170 crore were written off with Rs 30,016 crore recovered. In FY 2020-21, Rs 2,02,781 crore were written off with Rs 30,104 crore recovered. FY 2021-22 saw Rs 1,74,966 crore written off with Rs 33,534 crore recovered. In FY 2022-23, Rs 2,08,037 crore were written off with Rs 45,431 crore recovered. Finally, FY 2023-24 saw Rs 1,70,269 crore written off with Rs 44,893 crore recovered (provisional data).

In accordance with RBI guidelines, fully provisioned NPAs are removed from bank balance sheets through write-offs after four years. This allows banks to clean up their balance sheets, avail tax benefits, and optimize capital. Write-offs do not waive the borrower's liabilities, and banks continue recovery actions through various mechanisms. The government has taken comprehensive steps to tackle NPAs, including written-off loans, through measures like the Insolvency and Bankruptcy Code (IBC) of 2016, amendments to financial asset recovery laws, and increasing the pecuniary jurisdiction of Debt Recovery Tribunals to Rs 20 lakh.

The establishment of National Asset Reconstruction Company Limited (NARCL) and specialized units by Public Sector Banks (PSBs) to manage and recover stressed assets are other notable steps. (ANI)

(With inputs from agencies.)