To Keep NPAs In Check, RBI Begins Scrutinising 200 Stressed Accounts In Indian Banks

The Reserve Bank of India (RBI), in its attempt to contain non-performing assets (NPAs) has started scrutinising 200 large ‘stressed’ accounts in various Indian banks, The Hindu has reported. The exercise comes at a time when NPAs are estimated to be Rs 10.3 lakh crore, or 11.2 per cent of loans given by banks. A non performing asset (NPA) is a loan or advance for which the principal or interest payment remained overdue for a period of 90 days.

The central bank is examining whether the banks have followed stipulated norms in relation to these accounts according to a public sector bank official who spoke to The Hindu . Another official added that the exercise was part of the annual scrutiny of banks’ books at the end of each financial year. Videocon, Jindal Steel and Power are some of the accounts being scrutinised by RBI.

Scrutiny by RBI in the years 2016 and 2017 had revealed that banks had under-reported NPAs in their books. Under-reporting had led to a rise in NPAs in these years leading to falling share values of the banks. Private sector lenders too have been badly affected by the NPA mess despite their reputation of being more efficient than public sector banks. Among private sector banks Yes bank had under reported Rs 10,000 crores of NPAs while Axis bank and ICICI bank had a divergences of Rs 14,000 crore and Rs 5,000 crores respectively.

RBI’s scrutiny of NPAs in banks will help in early identification of bad loans and transparency in operations of both public sector and private sector banks.