RBI measures on Non-Performing Assets (NPA)

Non Performing Assets are increasing rapidly and shaking the entire banking sector including both public and private sector banks in India.

A credit amount for which both the principal amount and the interest due on the amount is not paid for a specific period of time (generally 90 days) is termed as NPA
NPA are also termed as bad loans or defaults
NPA arise as a result of bad lending practices, banking crisis, frauds in banking operations etc
Public sector banks are highly stressed due to NPA
NPA causes severe liquidity problems in banks and to the shareholders of the banks

RBI has reported gross NPA has increased to 11.1 percent from 9.2 percent in the previous year
RBI reports a staggering gross NPA figure of 3 lac crore
Stressed assets of banks stood at more than 6 lac crore
RBI has revealed that 5 out of 8 PSU banks have recorded huge losses due to NPA

The highly stressed public sector banks include

Borrowers find it difficult to borrow from banks as bankers show aversion to borrowers
The attitude of bankers towards the borrowers becomes arrogant
Borrower gets demoralized with such behavior of the employees and loses faith in the banking system.
Bank loyal customers move away from their banks
The reputation of the bankers is at stake in such high NPA situation
The relation between bankers and borrowers is not conducive
Banks start to adjust daily operations and accounts as a result of NPA
Shareholders lose confidence in the banks and withdraw their invested money from the banks as a result of NPA
Customer service of Banks becomes negative and employees start shouting at customers over the phone
Banks start moving towards bankruptcy

Punjab National Bank reported the maximum gross NPA and ranks top among public sector banks
Punjab National Bank reported gross NPA of 34338 crore, an increase of 10000 crore from previous year
Central Bank of India has reported gross NPA of 17564 crore
Dena Bank has reported gross NPA of 7916.47 crore
Allahabad Bank has reported gross NPA of 3494 crore
ICICI banks is facing huge problems due to NPA and faces the heat in the private sector
ICICI bank has reported gross NPA of 21149 crore, a steep rise of 70 percent compared to previous years

Asset restructuring
Divestment through sell off of stressed assets
Reformed Bankruptcy norms
RBI has asked banks to accelerate provisioning of stressed assets
This provisioning measure has reflected heavily on the profitability of the banks with banks recording huge losses or low profits
RBI has eased the NPA redressal norms
RBI revised guidelines on Strategic debt restructuring (SDR)
Banks can make provisions to the tune of 15% of the loan value
RBI relaxed Joint Lender’s Forum (JLF) by bringing down the divestment limit to 26% from 51%
RBI has released corrective action plan (CAP) on defaulters
RBI has initiated criminal action on willful defaulters
RBI has recognized Common Equity Tier I (CETI) capital for deferred tax assets
RBI has unlocked 40000 crore to banks to handle the NPA problem temporarily
Public sector banks will get an infusion of 35000 crore from RBI
Private sector banks will get an infusion of 5000 crore from RBI
SARFAESI Act amended to handle NPA related cases in State High court and Supreme court
The recent demonetization drive could help banks in recovering some of the NPA arrears