NPA Crisis

Package to resolve NPAs gets Cabinet nod


  1. The government has cleared a package to resolve the persistent rise in non-performing assets that are plaguing
    public sector banks and denting credit growth
  2. The package includes an ordinance to amend the Banking Regulation Act of 1949 to empower the Reserve Bank of India to take more actions to check bad loans
  3. Bad loans in the Indian banking system have gone up sharply in the last one year
  4. According to Reserve Bank of India data, gross NPA, as a percentage of gross advances went up to 9.1% in
    September 2016 from 5.1% in September 2015
  5. During the same period, stressed assets (which is gross NPA plus standard restructured advances and writeoffs), moved up from 11.3% to 12.3% and some estimates suggested it had doubled since 2013
  6. Stressed assets in some of the public sector banks have approached or exceeded 20%
  7. The Economic Survey of 2016-17 has pointed out the twin balance sheet problem — that is, stressed companies on one hand and NPA-laden banks on the other and advocates that a centralised Public Sector Asset Rehabilitation Agency (PARA) be established to deal with the problem of bad loans

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