The dangerously high levels of NPAs in public sector banks demand an immediate and effective resolution.
Banking upon a Solution
[ ##thumbs-o-up## Share Testimonial here - make our day!]
The problem of non-performing assets (NPAs) of Indian banks has already become unmanageable and is a threat to the whole economy now. In December 2016, NPAs were 12.5% of the total lending of the banking system. China has been growing at a very high speed for the last 40 years, and has now slowed down. So, it has its share of bad loans as well. How big? In May 2016, the figure of bad loans had grown to 1.75% of the total lending! Chinese authorities are worried about this “high” growth and are making efforts to contain them to below 2%. So what of India’s 12.5%? There is no visible alarm at all. Demonetization has already dealt a harsh blow to the entire economy. Bankers were busy managing its fallout than focusing on the economy. Post demonetization, investigating agencies (IT and CBI etc.) are harassing bank officials for loans sanctioned in the past which have turned bad (One example - the ex-MD of IDBI bank, arrested over the KF scandal). This has not only shocked bankers, but also made them reluctant to lend to projects that look good on paper. It can kill the cycle of investments in India. View the latest NPA data, here
Loan defaults are of two types – (1) Arising out of circumstances beyond one’s control, and (2) Willful defaulters. Strangely, the PSU stocks jumped 76% in the last 12 months, which is the second fastest growing stock after metals (98%). While the interest spread (difference between interest paid and interest received) of PSB shrunk from 2.8% in 2011 to 2.6% now – a sharp fall in the cut-throat competition. So, the rise in the stocks of PSB seems to be a bubble which may burst anytime causing enormous harm to investors as well as the economy. Lending has become paralysed. It was a meager 5% growth till December 2016 (lowest in 10 years). PSBs are the country’s largest lenders, and paralyzing them is killing our economy. Liquidity must soon return to the system if the economy is to revive from the shock of demonetization. Watch many video analyses on Demonetisation here, on Indian economy here, and on GST here.
BODHI BOOSTER Bodhis News Shrutis Quizzes Sameeksha Bhasha Downloads | GOVT. EXAMS Headlines Quizzes | APTITUDE PT Boosters Full Site | CIVILS TAPASYA English हिंदी Answer-writing | FULL COURSES Self-Prep Online | VOCAB Course
[ ##bug## Errors? Suggestions? Welcome here!] Comments welcome in the thread below!
COMMENTS