Page 44 - BANKING FINANCE JULY 2016

ARTICLE

THE JOURNEY
OF NPA IN PSU
BANKS -A NEED
FOR FURTHER
REFORM

A fter liberalization the Indian banking sector has However, the only problem of the Public Sector Banks these
developed appreciably. The RBI has also nation- days is the increasing level of the non performing assets and
alized good number of commercial banks for the rising amount of capital provisioning which has badly
providing socio economic services to the people affected the profitability of Banks. The non performing as-
of the nation. The Public Sector Banks have sets of the Public Sector Banks have been increasing regu-
shown very good performance as far as the financial op- larly year after year.
erations are concerned. If we look at the financial opera-
tions, we may find that deposits of public to the Public Sec- If we look at the numbers of non-performing assets we may
tor Banks have increased; the investments of the Public come to know that in the year 1997 the NPAs were
Sector Banks have increased, and however the advances Rs.47,300 crore and it has now reached to Rs 4,04,667 crore
have also been increased. as on 31st December 2015.

The total income of the public sector banks have also shown Asset Classification and Provisioning
good performance since the last few years. The Public Sec-
tor Banks have also shown comparatively good result. Norms

About the author Prudential norms relating to asset classification have been
changed post-liberalisation. The earlier practice of classify-
B B Lenka ing assets of different quality into eight health codes have
Chief Manager been replaced by the system of classifications into four cat-
Union Bank of India Staff College egories (in accordance with the international norms): Stan-
Bangalore dard, Sub-standard, Doubtful, and Loss assets. On 1st April
2000, provisioning requirements of a minimum of 0.25%
were introduced for standard assets. For the sub-standard,

44 | 2016 | JULY | BANKING FINANCE

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