Banks recover NPAs worth Rs 8.6 lakh crore in last 8 financial years

Tags: Economy/Finance

Minister of State for Finance Bhagwat Karad said in writing in Parliament on July 18 that the RBI helped banks to recover over Rs 8.6 lakh crore of bad loans (NPAs) in the last eight financial years.

Factors of recovery of NPAs

• Prevailing macroeconomic conditions, sectoral issues, global business environment, delayed recognition of stress by banks, aggressive lending during upturns, improper risk pricing and poor credit underwriting etc.

• Regular issuance of guidelines by Government and RBI and initiation of several initiatives aimed at resolution of long stressed assets.

• Statutory provisions like Recovery of Debts and Bankruptcy Act, 1993, Securitization and Reconstruction of Financial Assets and Security Interest Act, 2002 and Insolvency and Bankruptcy Code, 2016 were also helpful for recovery of NPAs.

What is Non-Performing Asset (NPA)?

• Non-performing assets mean debts whose return is doubtful.

• The loan which the bank gives to its customers, records it as an asset in its account, but if the bank fears that the customer will not be able to repay the loan, then such assets are called non-performing assets.

• Non-performing assets (NPA) are a burden for any economy. They make the country's banking system sick.