“So, it should be safe to assume that the NPAs mess would largely be resolved by the first quarter of financial year 2019-20,” Assocham study titled ‘NPAs Resolution: Light at the end of tunnel by March 2019’ said. It is no secret that NPAs are a big drain on the financial health of banks especially public sector banks (PSBs). For example, 27 PSBs collectively made an operating profit of Rs1.5 trillion in 2016-17, but after allowing for the provisioning for bad loans, among others, net operating profit slipped to a paltry Rs574 crore. The government gave wide-ranging legislative powers to the RBI to issue directions to lenders to initiate insolvency proceedings for the recovery of bad loans that have reached unacceptably high levels,” he said. Banks were reluctant to resolve NPAs through settlement schemes or sell bad loans with hair cut to asset reconstruction companies for fear of 3Cs—CBI, CAG and CVC.

Source: Mint July 16, 2017 15:56 UTC