NEW DELHI: Even as the level of bad assets surge for public sector banks, their recovery efforts have not yielded desired results.
Total recovery of non-performing assets (NPAs) by government banks slid marginally to Rs 1.27 lakh crore in 2015-16 from Rs 1.28 lakh crore in 201415. Meanwhile, banks have registered a 118% annual increase in fresh slippages to bad loans to Rs 3.90 lakh crore as on March 31, 2016.
Banks that show healthy recovery of bad loans are likely to get larger chunks of the government’s recapitalisation plan of Rs 25,000 crore.
“Banks, which are hit by rising NPA, need to do much more to recover the money. They need to come up with concrete plans. Each bank can come out with its own strategy but recovery needs to step up,” a senior finance ministry official told HT.
Gross NPAs for public sector banks increased from Rs 2.67 lakh crore — 5.43% of gross advances — in March 31, 2015 to Rs 4.76 lakh crore or 9.32% as of March 31, 2016.
The Bank Board Bureau and the Indian Banks’ Association are also looking into the issue and banks may have to regularly submit their report cards on the status of loan recovery.
For the first time, public sector banks have reported a combined net loss of Rs 18,000 crore, primarily due to the stringent provisioning norms outlined by the Reserve Bank of India.