Public sector banks' bad loans from wilful defaults rose 138% to Rs66,190 cr in 3 years

Wilful defaults of public sector bank loans topped Rs66,190 crore across 7,686 non-performing accounts, even as top 100 non-performing accounts or bad loans of state-run banks added up to Rs1,73,000 crore as of end-December 2015, minister of state for finance Jayant Sinha informed the Rajya Sabha on Tuesday.

PSBs saw the number of willful defaults rising from 5,554 accounts to 7,686 accounts in the three years ended December 2015 while the amount involved more than doubled (a 138 per cent increase) to Rs66,190 crore from Rs27,749 crore, he said.

"The total exposure of top 50 defaulters of PSBs as of December 2015 was Rs1,21,832 crore," he said in a written reply in the Upper House.

Overdue accounts with outstanding loans of Rs500 crore or more stood at 1,365 as of December 2015, Sinha said, adding that the government has taken specific measures to address issues in sectors such as infrastructure, steel and textiles, where instances of NPAs are high.

The outstanding amount rose the steepest (5,363 per cent) in the case of Punjab National Bank (PNB) which in December 2015 had unrecovered loans of Rs10,870 crore. PNB listed Winsome Diamonds & Jewellery, Zoom Developers and the defunct Kingfisher Airlines and its guarantors United Breweries Holdings and United Spirits chairman Vijay Mallya among its wilful defaulters.

The spike in bad loans can be attributed to several causes, which include the economic downturn, la credit risk appraisal and loan monitoring and risky projects.

While advocating strong action against wilful defaulters, RBI governor Raghuram Rajan had earlier said that it would be wrong to assume mala fide in all cases where loans turn into bad debts.

State Bank of India (SBI) retains the top slot among PSBs with its exposure to wilful defaulters rising 60 per cent to Rs11,705 crore in the three years to December 2015. Other PSBs with high exposure to wilful defaulters are -  Central Bank of India (Rs4,408 crore ), UCO Bank (Rs4,251 crore) and Oriental Bank of Commerce (Rs3,834 crore).

Stress assets in the corporate loan book of PSBs is expected to balloon to Rs7,10,000 crore by 31 March 2017 (accounting for 11.3 per cent of total loan book) from around Rs4,00,000 crore as of 31 March 2015 (7.2 per centof loan book), according to a recent report by rating agency Crisil.