Public sector banks (PSBs) provide the bulk of long-term funding in India. Over the past 10 years, lending by PSBs for steel production, power generation and infrastructure projects was not adequately prudent. At the end March 2016, the net non-performing assets (NNPAs) of PSBs amounted to Rs 2.5 lakh crore. The same number as a percentage of gross domestic product was 1.9 per cent and for all scheduled commercial banks (SCBs) it was 2.6 per cent. By September 2016, the ratio of NNPAs to total net advances for PSBs had risen to 7.4 per cent. Total government provisioning for recapitalisation of PSBs is comparatively inadequately lower at Rs 80,000 crore.
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