Page 38 - Banking Finance April 2020

ARTICLE

Graph I: Percentage of Priority and Non-priority sector NPAs of Public sector banks in India

From 2006 to 2008 NPA in Non-priority sector started the last 10 years except 2008-09, shows that the
declining and NPA in Priority Sector spiked at an over Government is guided by Crony Capitalistic policies.
whelming rate (Graph I). Boom in the world economy
coupled with aggressive lending to the industrial sector Table II: Loans written off during 2007-08 to
by the Public sector banks contributed to such steep decline 2013-14 (Rs. in crores)
in Non-priority sector NPAs. The 'Global Financial crisis' in
2007-08 8019
2008 is the beginning of difficulty in debt servicing by
2008-09 7461
corporate.
2009-10 11185
Non-priority sector NPA started increasing from 2009 2010-11 17794
onwards and the position of NPA in priority sector stood at 2011-12 15551
Rs.557.80 billion and NPA in non-priority sector stood at Rs. 2012-13 27231
588.26 billion of total NPA of Rs.1172.62 billion on 2012. In 2013-14 34409
percentage terms also NPA in priority sector and non-priority TOTAL 121650
sector was 47.57% and 50.17% of total NPA (Table I). This Source: https://indianexpress.com/article/business/banking-
was the inception of distress in the Indian banking industry and-finance/psu-banks-write-off-rs-55356-crore-in-six-
and the distress continues till today and NPA in non-priority months-bad-debt-4966594.
sector in 2018 stood at Rs.7080.90 billion, 79.06% of total
NPA of banking industry (Table I). Table III: Loans written off during 2007-08 to
2013-14 (Rs. in crores)
However, the shift of power in the Union Government in
2014 has changed nothing because as instead of direct 2014-15 49018
2015-16 57585
funding to corporate sector practiced by the previous
2016-17 81683
government, the new government has directed the public
2017-18 84272#
sector banks to write off bad corporate loans from the
TOTAL 272558
books. This change was visible from 2008 onwards but from
2014-15 it was practiced in a rampant manner. The Source: Indiastat Database
exponential write off of bad corporate loans by PSBs over Note: # Upto 31st December, 2017.

36 | 2020 | APRIL | BANKING FINANCE