PSBs' bad loans hit Rs 6.89 trn, or the cost of electrifying half of India!

Indian public sector banks’ (PSB) bad loans soared 1.5 times, from Rs 2.67 lakh crore ($39.99 billion) on March 31, 2015, to Rs 6.89 lakh crore ($103.21 billion)–an amount that could electrify half of India’s households–on June 30, 2017, according to this reply to the Lok Sabha (lower house of parliament) by Shiv Pratap Shukla, minister of state for finance, on April 6, 2018.

Of the 21 public sector banks, 11 had non-performing assets (NPAs) greater than 15% of total assets, as per data cited by the minister. In light of the Rs 11,000 crore fraud at Punjab National Bank, the Reserve Bank of India (RBI) has placed all 11 under scrutiny, The Financial Express reported on April 9, 2018. Five more PSBs are expected to join the ranks. Demands that PSBs be privatised have also been reinvigorated since the fraud was unearthed in February this year.

Among other corrective action, the RBI will restrict their lending activities, opening up of new branches and recruitment.

Indian companies and individuals owed Rs 4.1 lakh crore ($61.41 billion) to PSBs in overdue loans in the “non-priority sector”–mainly corporate lending, car loans, personal finance, credit card dues and home loans–as of March 2016. These NPAs, if fully recovered, would suffice to pay off distressed farm loans across eight states, with a third (32%) still left over, IndiaSpend had reported on July 31, 2017.

In the decade to 2016, bad loans in the non-priority sector rose more than 22-fold (2166%) from when they were valued at Rs 18,300 crore in 2006, the report said. During the same period, the sector’s share in public sector banks’ NPAs rose from 44.2% to 76.7%. This growth was particularly pronounced after 2011, when it became 12-fold (1110%) over five years.

NPA Ratio Of Public Sector Banks
Public Sector Banks	NPA Ratio (In %)	Put Under Prompt Corrective Actions By RBI
Allahabad Bank	15.46	Yes
Andhra Bank	14.26	Expected to be
Bank of Baroda	13.22	No
Bank of India	15.49	Yes
Bank of Maharashtra	19.05	Yes
Canara Bank	10.58	Expected to be
Central Bank of India	18.08	Yes
Corporation Bank	15.92	Yes
Dena Bank	19.56	Yes
IDBI Bank Limited	24	Yes
IndianBank	6.4	No
Indian Overseas Bank	22.74	Yes
Oriental Bank of Commerce	16.95	Yes
Punjab & Sind Bank	10.95	Expected to be
Punjab National Bank	12.88	Expected to be
State Bank of India	11.8	No
Syndicate Bank	10.91	No
UCO Bank	23.29	Yes
Union Bank of India	13.54	Expected to be
United Bank of India	20.1	Yes
VijayaBank	6.17	No

Source: Lok Sabha and Financial Express; Data as of December 31, 2017,

 

(Note: The numbers related to electrification are arrived at by multiplying Rs 3,000 per household, the amount the central government is providing for electrification under the Saubhagya scheme, with the overall number of households in the country.)

(Tripathi is a principal correspondent with IndiaSpend.)

Reprinted with permission from IndiaSpend.org, a data-driven, public-interest journalism non-profit organisation.