The non-performing assets (NPA) accumulated by Indian lenders are higher than those of banks in most major economies, including the US, UK, China, and Japan.According to recent report by CARE Ratings, India has been ranked fifth on the list of countries with highest Non-Performing Assets (NPA), and is occupying the top spot among the BRICS nations.With a pile-up of bad loan cases like the recent PNB fraud case , Indian banks seem to be winning the wrong race.
Countries with higher NPA ratios (to the total loans) than India’s are part of the distressed PIIGS group—Portugal, Italy, Ireland, Greece, and Spain. These five euro zone nations have faced immense economic and financial stress for a decade now, with several steps having been taken to restore their health.However, unlike them, India has been shown a commendable growth rate in the last few years inspite of the fact that lenders are under immense pressure due to bad loans.
According to the Reserve Bank of India (RBI),Gross NPAs rose to 10.2% in September 2017, compared to 9.6% in March. RBI has also warned that gross NPAs may jump to as high as 11.2% by March 2018. For public sector banks, the gross NPAs could touch as high as 14.2% by March 2018.
As we analyse the main reasons behind this critical crisis of this country, we get to know that the Congress-led UPA government was responsible for the NPAs of banks. The total lending of banks was Rs 18 lakh crore in 2008 and it grew to Rs 52 lakh crore in 2014 due to indiscriminate lending during the Congress-led United Progressive Alliance (UPA) regime.
During the Congress-led United Progressive Alliance (UPA) regime, Indian banks gross non-performing assets (GNPAs) increased from Rs 53,917 crore in September 2008 to Rs 2,40,971 crore in March 2014. Congress-led UPA government made such banking policies in which pressure was exerted on the banks and telephone calls were made so that favourites would get loans. The government, bank and middlemen jointly restructured the loans on paper and lakhs of crores were given. These bad loans turned into NPAs later.
Though the Modi government is dedicately working to resolve this crisis, it will definitely take some time.