Public sector banks reduced their bad loans (NPAs) by close to Rs 61,000 crore in the first six months (April-Sept) of the current financial year, which is two times more than the NPAs they shed through recovery in the same period last year, the finance ministry said in Parliament on Thursday.
The reduction seems insignificant given the fact that the gross NPAs of state-owned lenders have reached close to Rs 9 lakh crore. However, the Centre may use it as an ammunition to push for increased credit to businesses and ask the Reserve Bank of India to free up a few banks from its stringent lending norms when it holds its crucial board meeting on Friday. The government has two of its strong members in the board — Economic Affairs Secretary Subhash Chandra Garg and S Gurumurthy.
“PSBs reported record recovery of Rs 60,713 crore in the first half (April-Sept) of 2018-19, which is more than double the recovery made in the first half of 2017-18,” Minister of State for Finance Shiv Pratap Shukla said in Rajya Sabha in reply to a question. He said bad loans of PSBs have reduced by Rs 2.61 lakh crore in four and a half years of NDA rule.
According to the minister, the 30-day plus overdue accounts that are known as special mention accounts have also reduced steadily to around 39% over five quarters from Rs 2.25 lakh crore in June 2017 to Rs. 0.87 lakh crore in September 2018 for PSBs. The minister said it indicated a “sustained and significant” reduction in risk of fresh NPAs and an improvement in the asset quality of banks.
An RBI report recently, too, had suggested that the worst of non-performing asset problems in the public sector banks might be over and that credit growth was expected to be back.
The aggregate Gross NPAs of state-owned lenders increased from Rs 2,29,278 crore as on March 2014 to Rs 8,95,600 crore as on March 2018 as per RBI data on domestic operations.