Gross NPAs of banks drop sharply to Rs 6.09 lakh crore in September 2020

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New Delhi: Gross non-performing assets (NPAs) of public sector banks (PSBs) declined from  ₹8.96 lakh crore in March 2018 to ₹6.09 lakh crore in September 2020 due to various measures taken by the government, minister of state for finance Anurag Singh Thakur informed Rajya Sabha on Tuesday.

There was record recovery of Rs 2.54 lakh crore during March 2018 and September 2020 and 11 out of 12 PSBs reported profit in the first half of 2020-21 amounting to Rs 14,688 crore, he said in a written reply to Rajya Sabha. Provision coverage ratio of PSBs is at over eight-year high at 85.06% at the end of September 2020.

Asset quality review (AQR) initiated in 2015 for cleaning up banks’ balance sheets revealed high incidence NPAs, he said.

As a result of AQR and subsequent transparent recognition by banks, he said, stressed accounts were reclassified as NPAs and expected losses on stressed loans, not provided for earlier under flexibility given to restructured loans, were provided for.

Further, all such schemes for restructuring stressed loans were withdrawn in 2017-18.

“Primarily as a result of transparent recognition of stressed assets as NPAs as per RBI data on global operations, gross NPAs of PSBs rose from Rs 2,79,016 crore as on March 31, 2015, to Rs 8,95,601 crore as on March 31, 2018, and as a result of government’s strategy of recognition, resolution, recapitalisation and reforms, have declined to Rs 6,09,129 crore as on September 30, 2020,” he said.

Replying to another question, Thakur said PSBs have raised Rs 50,982 crore in the form of both equity and bonds during 2020-21.

To supplement this, he said, government has infused capital of Rs 5,500 crore in PSBs out of Budget provision of Rs 20,000 crore made for this purpose in the current financial year.

For the next financial year, provision of Rs 20,000 crore for recapitalisation of PSBs has been included in the Budget recently tabled in Parliament.