NPA Crisis

Is PSL the real problem behind NPAs?


  1. Context: RBI Governor explaining real causes of huge bad loans to Public Accounts Committee (PAC)
  2. Observation: Private sector banks and foreign banks do not have as much NPAs as the Public Sector Banks
  3. This is despite the constraints under which the entire banking sector operates being the same
  4. Excuse: Priority Sector Lending (PSL) requirements are a burden on public sector banks
  5. Notwithstanding: Other banks have 2.2% NPAs whereas PSBs have 5.98% & it is hard to believe that the difference is only due to the PSL

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