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.
As you are no doubt aware, Swarajya is a media product that is directly dependent on support from its readers in the form of subscriptions. We do not have the muscle and backing of a large media conglomerate nor are we playing for the large advertisement sweep-stake.
Our business model is you and your subscription. And in challenging times like these, we need your support now more than ever.
We deliver over 10 - 15 high quality articles with expert insights and views. From 7AM in the morning to 10PM late night we operate to ensure you, the reader, get to see what is just right.
Becoming a Patron or a subscriber for as little as Rs 1200/year is the best way you can support our efforts.