Page 8 - Banking Finance August 2017

BANK UPDATE

Three-tier plan for PSBs Jan Dhan A/c deposits make an impact
Internal control plans are strength- A new high of Rs. 64,564 crores is touched by the deposits in Jan Dhan accounts.
ened by the The data was revealed by an RTI reply received from the
three tier Ministry of Finance. It shows that there were about 28.9
plan as de- crore PMJDY accounts on June 14 this year. Of these, 23.27
vised by the crore accounts were with public sector banks, 4.7 crore with
Public Sec- regional rural banks and 92.7 lakh with private ones.
tor Banks.
An informal rule of thumb is devised Advanced rise in bad education loans
to solve stressed asset cases by the As job market is getting a hit, the recovery of educational loans become diffi-
RBI. Smaller stressed accounts of less cult. The Indian banks have seen a 142 % rise in default by
than Rs1,000 crore would be sold to students who have educational loans in recent past. Public
asset reconstruction companies Sector Banks, as already weighed down by corporate de-
(ARCs), mid-sized cases of Rs1,000- faults are the worst hit as they account for over 90 per cent
5,000 crore will be resolved through of educational loans. Private Banks have managed to stay
the various RBI restructuring schemes away from this segment.
and larger cases will be tried at the In the education segment, the total non-performing assets
National Company Law Tribunal (NPAs), or loans on which borrowers have defaulted on pay-
(NCLT) in accordance with RBI rules. ments for more than the stipulated 90 days, stood at Rs 6,336 crore at the end
of December 2016, against Rs 2,615 crore in March 2013, the Reserve Bank of
Non Performing Assets India (RBI) revealed. This is 8.76 % of the total education loan outstandings of
to come down Rs 72,336 crore as of December 2016, against Rs 48,382 crore in March 2013,
A study by the Assocham revealed the RBI replied an RTI filed.
that as the RBI Public sector banks to soon reduce to 12 in number
plans to push for
The Central Government plans on a consolidation agenda to create 3-4 global
the resolution of
sized banks and reduce the Public Sector Banks to 12.
bad loans worth
around Rs 8 lakh Some region centric banks like Punjab and Sind Bank and
crore by March Andhra Bank will continue as independent entities, while
2019, it could some mid-size lenders would also coexist. Currently there
bring down the NPAs and improve are 121 PSBs functioning.
the financial health of banks. Post success of SBI merger, the Ministry of Finance is considering clearing another
"So, it should be safe to assume that proposal if the bad loan scenario is improved. Mr. Jaitley recently mentioned the
the non-performing asset (NPAs) government is "actively working" towards consolidation of public sector banks but
mess will largely be resolved by the declined to provide details, saying this was price-sensitive information.
first quarter of financial year 2019-
20," mentions an Assocham study, 'Save public sector banks' day on July 19
titled "NPA Resolution: Light at the "Public sector banks are made to bear the cross for the sins of the private cor-
end of the tunnel by March 2019". porate defaulters", said C H Venkatachalam, General Secretary, All India Bank
Employees Association. The United Forum of Bank Unions observed July 19, the
Although the whole of the NPAs can
be put on the altar of the Insolvency 48th anniversary of nationalisation of major banks, as 'Save public sector banks'
and Bankruptcy Code (IBC) resolution day. Members wore commemorative badges and displayed posters in front of all
mechanism, it has to be seen how branches, distributed leaflets demonstrations took place across the country.
much and how fast they actually go "Everyone knows that the main share of this danger is contributed by the corpo-
out from the balance sheets of banks rate defaulters who are taking our banks for a ride. It is high time that the gov-
which at this point of time seem ernment took stringent measures to recover the bad loans and take bold action
much stressed, it said. against the big defaulters." Venkatachalam said.

8 | 2017 | AUGUST | BANKING FINANCE

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