Anurag Thakur: Bank NPAs have fallen by nearly Rs 98,000 crore to Rs 9.38 lakh crore by June end 2019
The gross non-performing assets (NPAs) of scheduled commercial banks (SCBs) have fallen by nearly Rs 98,000 crore to Rs 9.38 lakh crore by June end this year, Minister of State for Finance Anurag Thakur informed the Lok Sabha today.
According to Reserve Bank of India (RBI) guidelines, banks do not have any Minimum Balance requirement for Basic Savings Bank Deposit accounts (BSBD), including accounts opened under Pradhan Mantri Jan Dhan Yojana (PMJDY).
As on March 2019, there were 57.3 crore BSBD accounts across the country, including 35.27 crore Jan Dhan accounts. There are no charges for not maintaining minimum balance for these accounts. BSBD accounts provide certain basic minimum facilities free of charge. For accounts other than BSBD accounts, as per RBI’s Master Circular on “Customer Service in Banks” dated July 1, 2015, banks are permitted to fix service charges on various services rendered by them, as per their Board approved policy, while ensuring that the charges are reasonable and not out of line with the average cost of providing these services.
As apprised by eighteen Public Sector Banks (PSBs), the amount collected through the levy of charges for non-maintenance of minimum balance in Savings Bank account, during the last three financial years, are as under:
This information was shared by the Minister of State in the Ministry of Finance Mr Anurag Thakur who was replying to an unstarred question asked by Shri Vasanthakumar H. in the Lok Sabha whether the ministry is aware that due to economy slowdown customers and firms failing to meet the Average Monthly Balance (AMB) requirements in a month have to bear penalty charges, if so, the details thereof including the average income through this penalty by the banks for the last three years area-wise like metro/urban/semi-urban/grameen.
NPAs have declined by Rs. 97,996 crore to Rs. 9,38,191 crore as on 30.6.2019 from Rs. 10,36,187 crore as on 31.3.2018. This information was shared by MoS Finance Anurag Thakur was responding to Congress MP Deepak Baij's query on the details of the amount of NPAs of various banks written off during the last five years and its impact on the Indian economy. Mr. Thakur added that the gross NPAs stood at Rs 3,23,464 crore on March 31, 2015 and increased to over Rs. 10,36,187 crore by the end of FY 2017-18 on March 31.
As per data of the Reserve Bank of India (RBI), aggregate gross advances of Scheduled Commercial Banks (SCBs) in their global operations increased from Rs. 25,03,431 crore as on 31.3.2008 to Rs. 68,75,748 crore as on 31.3.2014. As per RBI inputs, the primary reasons for the spurt in stressed assets have been observed to be, inter-alia, aggressive lending practices, wilful default / loan frauds /corruption in some cases, and economic slowdown. Asset Quality Review (AQR) initiated in 2015 for clean and fully provisioned bank balance sheets revealed high incidence of Non Performing Assets (NPAs).
As a result of AQR and subsequent transparent recognition by banks, 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. Primarily as a result of transparent recognition of stressed assets as NPAs, gross NPAs of SCBs, as per RBI data on global operations, rose from Rs. 3,23,464 crore as on 31.3.2015, to Rs. 10,36,187 crore as on 31.3.2018.
As per RBI guidelines and policy approved by bank Boards, non-performing loans, including those in respect of which full provisioning has been made on completion of four years, are removed from the balance-sheet of the bank concerned by way of write-off.
Banks evaluate/consider the impact of write-offs as part of their regular exercise to clean up their balance-sheet, avail of tax benefit and optimise capital, in accordance with RBI guidelines and policy approved by their Boards.
Banks claim that the recovery measures continue even after write-offs. Bank-wise details of NPAs written-off by SCBs for the last five financial years are at Annexure 1.The Gross Domestic Produce for the Indian economy has grown at an average annual growth rate of 7.5% over the last five years, with growth rate of 6.8% (provisional estimates) in the financial year 2018-19, enabled by growth in gross advances of SCBs of an average of 9.3% over the last five years and growth of 13.3% in the financial year 2018-19. Details in this respect are at Annexure 2.
As per RBI data, the details of loans of SCBs in their global operations that were written-off and pertain to “Agriculture and allied activities” and “Services—Trade” are at Annexure 3.
As per the list provided in Lok Sabha as response to unstarred question no. 1285, regarding writing off bank NPAs, the State Bank of India wrote off Rs 56,481 crore in FY 2018-19.
Other major banks which wrote off large amounts in FY2018-19 include IDBI Bank Ltd (Rs 14,166 crore), Canara Bank (Rs 13,849 crore), Bank of Baroda (Rs 11,725 crore), Central Bank of India (Rs 10,375 crore) and Punjab National Bank (Rs 11,238 crore).
The NPA write-offs of banks such as Axis Bank, Bank of India, Bank of Maharashtra, Corporation Bank, Dena Bank, HDFC Bank, ICICI Bank, Oriental Bank of Commerce, Syndicate Bank, Union Bank of India and United Bank of India ranged between Rs 4,000 crore and Rs 10,000 crore in FY 2018-19.