Public sector banks wrote off a record Rs 81,683 crore in bad loans for the financial year that ended in March 2017, The Indian Express reported on Monday. Non-performing assets in 2015-2016 were Rs 57,586 crore, which is 41% less than the latest figures, according to Finance Ministry data. The combined profits of the banks for the year was Rs 474 crore.
This is despite the Finance Ministry directing banks to take several measures against non-performing assets, including changing loan recovery laws, and empowering the Reserve Bank of India to rapidly start insolvency processes against stressed assets.
The RBI has so far asked banks to begin bankruptcy proceedings against 12 big loan defaulters, who account for more than a quarter of the Rs 9 lakh crore of the country’s bad loans. On August 3, the Lok Sabha had passed a Bill giving the RBI the power to deal with stressed assets.
Analysts say the RBI may have to forgo 60% of the money it is owed if it wants to salvage even part of its NPAs. In its latest Financial Stability Report, the central bank expects bad loans to further go up by March 2018 if on-ground conditions do not change.
Bankers meet to discuss insolvency process
Bank representatives will meet in Mumbai on Monday to review the insolvency work done so far, Business Standard reported. The RBI had directed that insolvency proceedings be started against 12 loan defaulters on June 13. Among them are Essar Steel and Jaypee Infratech.