Parliamentary Standing committee on Finance tabled report on NPAs of Public Sector Banks

Parliamentary Standing committee on Finance on 24 February 2016 submitted the report on the Net Non performing Assets (NPAs) of Public Sector Banks (PSBs). The committee is chaired by M. Veerappa Moily.

The committee has tabled its 27^th report in Parliament which observed that many of bad loans of banks are because of companies with over capacity and weak demand.

Highlights of the Report:

• The committee reported that NPAs in the country’s PSBs are around 25024 crore rupees till September 2015 and the Gross NPAs during the same period is around at 369990 crore rupees.

• It said the deceleration in the economy has grind down the market for distressed assets so much so that even Asset Reconstruction Companies could not offload them.

• The committee suggested that the Reserve Bank of India (RBI) should consider such a dispensation that allows banks to absorb their written-off losses in a staggered manner and can help them restore their balance sheets.

• The committee expressed deep concerns about the Non performing assets of financial institutions despite various measures taken by the government and Reserve Bank of India (RBI) from time to time.

• The report stated that each year the cumulative net volume of NPAs of all banks and financial institutions are increasing instead of declining.

What are Non performing Assets (NPAs)?

It is a classification used by financial institutions that refer to loans that are default and unpaid. If the borrowers failed to pay interest or principal amount for 90 days then the loans are considered as non-performing assets.

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