The government on Thursday sounded warning bells at the prospects of the public sector banks (PSBs) going red with its funds increasingly locked up in non-performing assets (NPAs).
It is a matter of grave concern that their NPAs shot up by 8.88 per cent in just the first quarter of the current fiscal (April-June) to Rs 123,462 crore (Rs 1,234.62 billion).
In a written reply in the Rajya Sabha Minister of State for Finance Namo Narain Meena pointed out that this amounted to 3.48 per cent of the total advances given by the state-owned banks.
The percentage of the locked-up funds called non-performing assets in the economic jargon was 3.17 per cent of the total advances of these banks on March 31 at Rs 112,489 crore (Rs 1,124.89 billion), he said.
The private banks are much better with lesser funds so locked up in NPAs as their ratio to total advances at the end of June stood at 2.12 per cent as against 3.48 per cent for the government banks, the Minister said. In fact, private banks improved recoveries during the first three months of this fiscal.
The minister said the government has advised the government-owned banks to engage in new initiative to increase the pace of recovery to reduce NPAs.
The measures suggested include special drives to recover lost assets, appointment of nodal recovery officers, electronic clearance system to replace the practice of post-dated cheques that banks take from the defaulting borrowers and take help of the state government in the loan recoveries.
