Bad loans in public sector banks grow by Rs 80,000 crore in 3 months

While demonetisation and incremental taxes are being slapped on black money holders on the one side, bad loans are rising at an alarming rate on the other.

Published: 30th November 2016 04:02 AM  |   Last Updated: 30th November 2016 04:05 AM   |  A+A-

Money_Banks

Image used for representational purpose only

By Express News Service

NEW DELHI: While demonetisation and incremental taxes are being slapped on black money holders on the one side, bad loans are rising at an alarming rate on the other.

Public sector banks continue to play with fire by offering waivers to creditors, resulting in an increase of about Rs 80 thousand crore in gross non-performing assets (NPAs)  within a period of three months between July and September.

In a written reply to the Rajya Sabha, Minister of State for Finance, Santosh Kumar Gangwar claimed that none of these corporate waivers were done by the government. “But in an attempt to bloat the balance sheets and meet targets, banks tend to lend even to high-risk projects,” he said.

Gangwar said the government has taken sector specific measures, where incidence of NPAs are high (like in iron & steel, infrastructure) to reduce such incidents. Bankers, however, claimed such measures do not help. “The announcement is merely an eye-wash. Sector-specific measures will not help banks in any way,” says CH Venkatachalam, General Secretary of the All India Bank Employees Association.


Identifying sectors with large NPAs is not enough, say industry observers. The government should declare exposure of banks in these sectors and highlight the sectors that have more stressed assets on a quarterly basis. This, they say, will help banks to be on vigil. Also, banks are often influenced by politicians to lend in specific sectors. “In the past, NPAs accumulated due to large exposure in steel sector. If a guidance was provided, this could have been avoided,” says financial analyst Sanjeev G. Kumar.

Stay up to date on all the latest Business news with The New Indian Express App. Download now
(Get the news that matters from New Indian Express on WhatsApp. Click this link and hit 'Click to Subscribe'. Follow the instructions after that.)

Comments

Disclaimer : We respect your thoughts and views! But we need to be judicious while moderating your comments. All the comments will be moderated by the newindianexpress.com editorial. Abstain from posting comments that are obscene, defamatory or inflammatory, and do not indulge in personal attacks. Try to avoid outside hyperlinks inside the comment. Help us delete comments that do not follow these guidelines.

The views expressed in comments published on newindianexpress.com are those of the comment writers alone. They do not represent the views or opinions of newindianexpress.com or its staff, nor do they represent the views or opinions of The New Indian Express Group, or any entity of, or affiliated with, The New Indian Express Group. newindianexpress.com reserves the right to take any or all comments down at any time.

facebook twitter whatsapp