RBI Data Shows Decline In Gross Non-Performing Assets Of Scheduled Commercial Banks

To a question in the Lok Sabha, Union Minister of State for Finance Dr Bhagwat Kisanrao Karad stated in a written reply that according to RBI’s (Reserve Bank of India’s) global operations data, the gross non-performing assets (GNPAs) of the Scheduled Commercial Banks (SCBs) have declined. He said that the decline has been noted to fall to Rs 8,00,463 crore (GNPA ratio of 6.93%) as on 30.9.2021, from the previous Rs 9,33,779 crore (GNPA ratio of 9.07%) as on 31.03.2019.

The Minister further stated that as per the RBI data, the GNPAs of Deposit Taking-NBFCs and Non-Deposit taking Systemically Important-NBFCs were recorded at Rs 1,91,413 crore (GNPA ratio of 6.87%) as on 30.9.2021.

The Minister went on to state that as per the inputs received from RBI, GNPAs of Public Sector Banks (PSBs) as a proportion to that of Scheduled Commercial Banks, decreased from 79.2% on 31.3.2019 to 75.7% on 31.3.2020, and again to 73.8% on 31.3.2021 and furthermore reduction was reported at 72.3% on 30.9.2021. At the same time, the GNPAs of the Private Sector Banks (PVBs) as a proportion to that of Scheduled Commercial Banks increased from 19.4% on 31.3.2019 to 23.0% on 31.3.2020, then to 24.2% on 31.3.2021 and yet again to 24.9% as reported on 30.9.2021.

Measures Undertaken By Central Government and RBI

On the question of corrective measures undertaken by the Government and the RBI, Dr Bhagwat Kisanrao Karad informed that several measures have been formulated to increase the credit penetration in the economy, which includes:

1. 44.51 crore accounts opened under the Pradhanmantri Jan Dhan Yojana (PMJDY), a scheme that was launched with the national mission for the financial Inclusion and to ensure everyone’s access to financial services such as a basic savings and deposit accounts, remittance, credit, insurance and pension in an affordable manner.
2. Overdraft facility limit of upto Rs 10,000 has been extended to the eligible account holders Pradhanmantri Jan Dhan Yojana (PMJDY).
3. The Pradhan Mantri Street Vendor’s Atma Nirbhar Nidhi (PM SVANidhi) scheme has been launched to support the poor street vendors who were impacted by Covid-19 pandemic. The scheme that intends to help the vendors resume their livelihood activities, has helped 32.69 lakh street vendors to receive credit amounting to Rs 3,364 crore till 31st of January 2022.
4. Initiated enhanced credit access under Deendayal Antyodaya Yojana-National Rural Livelihoods Mission (DAY-NRLM) and Deendayal Antyodaya Yojana-National Urban Livelihoods Mission (DAY-NULM) schemes for self-employment programme. Under the schemes, in the last three financial years, 78,66,199 and 16,63,704 beneficiaries, respectively have received credit facilities.
5. Other than NBFCs-Micro Finance Institutions (MFIs), bank credits have been provided to Non-Banking Financial Institutions (NBFCs) for on-lending to agriculture, micro and small enterprises, and housing, which has been made eligible for classification as the priority sector.
6. Digitalisation has been brought-in in lending to increase the reach of institutional credit;
   • Contactless Digital Lending has been made possible through the PSBloansin59minutes.com, to provide online ‘in principle’ approval of loans to Micro, Small and Medium Enterprises (MSMEs), and also Home Loans, Personal Loans and Auto Loans to individuals.
   • Online bill discounts have been enabled for MSMEs which are on a highly competitive basis, through the Public Sector Banks (PSBs), thus onboarding onto the Trade Receivables Discounting System (TReDS) platform.
   • End-to-end automated digital lending has been introduced in larger Public Sector Banks to provide unsecured personal loans (in five PSBs), loans to micro-enterprises or “Shishu Mudra (in five PSBs) and the renewal of loans to MSMEs (in three PSBs).
   • Credit offers based on the needs of the customer and driven by analytics have been given an impetus, resulting in Rs 49,777 crore of fresh retail loan disbursements by the seven larger agricultural credit Public Sector Banks in the financial year 2020-2021.
   • Loan Management Systems and Centralised Processing Centers have been set up in the Public Sector Banks (PSBs) for improving the turn-around-time (TAT).
7. Specific target of 10% of Adjusted Net Bank Credit (ANBC) has been fixed for all commercial banks for small and marginal farmers, which will be implemented in a phased manner over a period of four-year, with effect from 2020-21, to facilitate the flow of credit to small and marginal farmers.
8. The Credit Outreach Programme has been launched by the Government of India on 16th of October 2021, to make loans available to eligible borrowers, through special camps across the country. Under the programme, as per the inputs received from the banks, an aggregate loan amount of Rs 94,063 crore has been sanctioned till 26th of November 2021.
9. An interest subvention scheme (2%) for short term crop loans of upto Rs 3 lakh, is being implemented to ensure the availability of agriculture credit at a reasonable and reduced rate. The scheme is being implemented through banks where the Public Sector Banks and the Private Sector Banks will be reimbursed by the RBI, while the Regional Rural Banks and the Cooperative Banks will be reimbursed through NABARD.

The Minister further said that several measures have been taken to promote regular repayment and to prevent the loan accounts from turning into non-performing assets (NPAs). These measures include:

1. To mitigate risk on account of misrepresentation and fraud, third party data sources are institutionalized in Public Sector Banks for comprehensive due diligence checks across data sources at the sanction stage itself.
2. Accounts are being classified as Special Mentioned Accounts (SMA) for the early recognition of signs of emerging stress which may result in default in timely servicing of debt obligations. It will enable banks to initiate timely mitigating actions to prevent their potential slippages into NPAs.
3. Using third-party data and workflow, automated Early Warning Systems (EWS) have been comprehensively institutionalized in banks, with approximately 80 EWS triggers, for time-bound remedial actions, to proactively detect any stress and reducing slippage into NPAs.
4. Regular and timely repayments are being incentivized through linking of eligibility for the next cycle of working capital loan with an enhanced limit with on-time or early repayment of existing loan under PM SVANidhi scheme.
5. Repayment behavior of borrowers in their loan accounts is reported to Credit Information Companies (CICs). The banks include these information in the credit appraisal and decision making process for further sanctioning of loans to the borrowers.