Letters: NPAs-The real picture

Apropos the report "Govt banks writing off more loan than they recover" (July 5), the reporter has painted a dismal picture but an incorrect one, primarily because of the manner in which banks, particularly the public sector banks (PSBs), handle their non-performing assets (NPAs) and recovery portfolios. By and large, PSBs concentrate on recoveries during the course of the year while major write-offs and prudential write-offs are done only in the last quarter. Therefore, the data for write-offs for almost all banks would be high in the fourth quarter compared to the recoveries.

Secondly, upgradation is also a major component of NPA reduction. Taking the example of just one bank, the cumulative data of cash recovery plus upgradation for Bank of India during 2012-13 was Rs 2,006 crore against a write-off plus prudential write-off of Rs 2,413 crore (according to a presentation to analysts). This may still agree with the title of the report, nevertheless the bank's position is not as precarious as it has been made out to be. If the data for the full year for all the 17 PSBs is revisited, the picture would be quite different.

S Ravindranath, Coimbatore

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