Banking Sector Reforms Begin To Deliver As Banks Record A Decline In NPAs After Seven Years

Banking Sector Reforms Begin To Deliver As Banks Record A Decline In NPAs After Seven YearsThe Reserve Bank of India office in Mumbai. (GettyImages)

With robust Insolvency and Bankruptcy Code (IBC) in place and favourable policy environment from the Centre and the Reserve Bank of India (RBI), the non-performing assets (NPAs) reported by the banks are finally witnessing a decline after increasing for seven years, reports Times of India.

The RBI in its report on the trend and progress of the banking sector in India has said that the NPAs reported by the banks are declining. It observed that the gross NPAs had dropped to 9.1 per cent in March 2019 compared to 11.2 per cent a year before that.

“Decline in the slippage ratio as well as a reduction in outstanding GNPAs helped in improving the GNPA ratio. While a part of the write-offs was due to aging of loans, recovery efforts received a boost from the IBC,” the report noted.

Recovery of stressed assets improved during 2018-19 mainly because of resolutions under the IBC, which contributed more than half of the total amount recovered.

The report also pointed out that all the bank groups had recorded an improvement in their asset quality, with public sector banks (PSBs) showing the biggest decline in their NPAs.