Nationalized banks makes NPA and contingencies provision of Rs 405456 crore in last four financial years: Finance Ministry

Government infuses capital of Rs 107543 crore in the last four financial years in nationalized banks

Asset Quality Review (AQR) of the bank sector carried out by the Reserve Bank of India in 2015 for clean and fully provisioned bank balance-sheets revealed high incidence of non-performing assets (NPAs). Expected losses on stressed loans, not provided for earlier under flexibility given to restructure loans, were reclassified as NPAs and provided for. Nationalised banks initiated cleaning up by recognising NPAs and provided for expected losses. Further, during the fourth quarter of the financial year (FY) 2017-18, all such schemes for restructuring stressed loans were withdrawn under RBI's Revised Resolution framework for Stressed Assets issued in February 2018.

As per the finance ministry, while nationalized banks posted aggregate operating profits during the last four financial years (2014-15 to 2017-18) of Rs 345180 crore, many had net losses primarily on account of continuing ageing provision for NPA recognized as a result of AQR initiated in 2015 and subsequent transparent recognition by banks including under RBI's Revised Resolution framework for Stressed Assets issued in February 2018.

Nationalised banks made aggregate provision for NPAs and other contingencies of Rs 405456 crore during the last four financial years, resulting in net loss of Rs 81009 on aggregate basis over the period.

Government has infused capital amounting to Rs 107543 crore in the last four financial years in nationalized banks to help them meet capital requirements.

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