Banks’ bad loans top Rs3,00,611 cr: Jayant Sinha

Banks in India, including state-run and private sector lenders, have accumulated non-performing assets (NPAs) to the tune of Rs3,00,611 crore as of December 2014, minister of state for finance Jayant Sinha informed the Lok Sabha on Friday.

The minister attributed the increase in NPAs to sluggish economic growth.

Of the total NPAs, state-run banks accounted for Rs2,62,402 crore of bad loans while private sector banks accounted for the remaining Rs38,209 crore, the minister said during question hour.

In percentage terms, gross NPAs of state-run banks constituted 5.64 per cent of their total gross advances of Rs46,49,843 crore as of December 2014, while NPAs of private sector lenders constituted 2.78 per cent of their total gross advances of Rs16,77,875 crore.

Sinha said the sluggishness in the economy over the last few years has reflected in stalled projects and these in turn have retarded repayment of bank loans by corporates.

Sinha, however, admitted that there have been other reasons than the sluggishness of the economy for an increase in non-performing loans of banks.

There have been several instances of connivance of bank staff in the award of bank loans and such lending without proper safeguards also cause a rise in bank NPA levels, he said. The minister also cited information provided by 20 major state banks which pointed to staff lapses in NPA cases, leading to dismissal of 470 employees and imposition of major and minor penalties on 5,177 and 5,811 employees, respectively.

"As per master circular, banks conduct enquiry to fix up staff accountability and impose minor or major penalties depending on merit of each case.

"In the period from April 2011-December 2014, as per the information provided by 20 major PSU banks, after conducting enquiries into the staff lapses in NPA cases, 470 employees were dismissed and major and minor penalties were imposed on 5177 and 5811 employees respectively," he said.

Sinha said RBI has taken a number of steps for recovery of NPAs that include having a board approved loan recovery policy, putting in place an effective mechanism for information sharing for sanction of loans and taking recourse to legal mechanism.

The RBI has early last year released guidelines for 'Early Recognition of Financial Distress, Prompt Steps for Resolution and Fair Recovery for Lenders: Framework for Revitalising Distress Assets in the Economy' suggesting various steps for quicker recognition and resolution of stressed assets.