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Bad loans to rise in current fiscal: RBI
Why in the news ?
- The Reserve Bank of India in its annual report, said banks will witness further deterioration in their non-performing assets (NPAs) due to the “economic situation prevailing” in the current financial year.
Details
- The central bank said the gross non-performing assets (GNPAs) plus restructured standard advances in the banking system remained elevated at 12.1 per cent of gross advances at end-March 2018.
- A loan whose interest and/or installment of principal have remained overdue (not paid) for a period of 90 days is considered as NPA.
- The combined impact of the increase in provisioning against NPAs and mark-to-market (MTM) treasury losses on account of the hardening of yields eroded the profitability of banks, resulting in net losses.
- The aggregate gross NPAs of SCBs increased primarily as a result of this transparent recognition of stressed assets as NPAs.
- It increased from Rs 323,464 crore, as on March 31, 2015, to Rs 10,35,528 crore, as on March 31, 2018.
Frauds on the rise
- As per the RBI report, the number of cases of fraud reported by banks increased both in terms of numbers and value in 2017-18.
- Fraud cases, which were generally hovering at about 4,500 in the last 10 years, increased to 5,835 in 2017-18.
- The amount involved in frauds was increasing gradually, followed by a significant increase in 2017- 18 to Rs.410 billion.
- The quantum jump in the amount involved in frauds during 2017-18 was on account of a large value fraud committed in the gems and jewellery sector, mainly affecting one public sector bank.
Source
The Hindu, Indian Express