State-owned banks should stop “ever-greening” or repeated restructuring of corporate debt to check the constant bulging of their Non-Performing Assets, members of a Parliamentary panel said on Friday.
The spiralling of NPAs is due to bad economic situation, observed the members of the Parliamentary Standing Committee on Finance - headed by former finance minister and senior BJP leader Yashwant Sinha, but emphasised that the NPA situation is horrendous and requires urgent attention.
“The committees’ suggestion to curb NPAs is that banks must stop ever-greening of loans. If there is strong case for restructuring, then go ahead and do it. But do not go on doing it repeatedly,” a member of the panel said after the meeting.
The members were of the view that NPAs are the result of bad economic situation, but there were also management issue of every-greening of loans which could be avoided by “not renewing loans, particularly of corporates”, the member said.
In view of the worsening NPA situation, it is the direct responsibility of the Reserve Bank to rectify the problem, he said, adding that RBI Governor Raghuram Rajan would appear before the panel on February 4.
“He could not find time today. We have decided that we will interact with him on NPAs on February 4, one day before the Parliament session begins,” the member said.
NPAs of public sector banks rose by 28.5 per cent from Rs 1.83 lakh crore in March, 2013 to Rs 2.36 lakh crore in September, as per the information provided by the Finance Ministry to Parliament in the recent Winter Session.
Total NPAs had gone up to Rs 1.37 lakh crore in March, 2012 from Rs 94,121 crore in March 2011. Thus the amount of NPA in September last year was more than double of what was in March 2011.
According to the information provided by Finance Ministry, top 30 loan defaulters of public sector banks (PSBs) account for more than a third of the total gross NPAs of the state-run lenders.
“The ratio of top 30 NPAs as a percentage of gross NPAs, in respect of public sector banks, as on September 2013 is 35.5 per cent and for all banks it is 38.8 per cent,” Finance Minister P Chidambaram had said in a reply to the Rajya Sabha.
The Gross NPA amount of top 30 accounts of public sector banks (PSBs) stood at Rs 72,174 crore, while for all banks it was Rs 91,667 crore at the end of September.
In case of nationalised banks, top 30 defaulters contributed 43.8 per cent to the GNPA with Rs 55,663 crore.