Robbery of loan of government banks – what truth what story?


Losses in January-March quarter of year 2018

Canara Bank – Rs 4,860 crore
Allahabad Bank – Rs. 3510 crores
UCO Bank – Rs. 2,134 crore
Dena Bank – Rs 1,225 crores
On Friday, these four public sector banks declared their January-March quarter results and said they had a total loss of Rs 11,729 crore.

Earlier, diamond trader Nirvava Modi had alleged that he had invested Rs 13,700 crore to Punjab National Bank and fled the country.

Prior to this, Vijay Mallya had also become bankrupt with the banks having about 10 thousand crores of rupees.

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Situation of government banks, that is, how dangerous NPA situation is, can be estimated from the fact that from the year 2013 to the year 2017, there was a surge of more than 311 percent and it increased from 1.55 lakh crore to six and a half million Reached the million rupees.

On August 11, 2017, Finance Minister Arun Jaitley had said in response to a question in Lok Sabha that the share of NPAs in the total assets of banks has increased to 12.47 per cent.

However, private banks are not behind this competition and their NPAs reached Rs 73,842 crore in 2017, against Rs 19,986 crore in 2013.

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What happens to NPA?
Before understanding NPA, it is important to know how banks work. Understand it with an example. For instance, if 100 rupees are deposited in the bank, 4 rupees (CRR) of the bank is kept with the Reserve Bank, it is to be kept in bonds or gold as Rs.15 (Rs. 19.5 per cent now, SLR is 19.5 per cent).

Bank can save remaining remaining 76 rupees in the form of debt. With interest from them, they pay their customers interest on their deposits and the remaining portion is the bank’s profit.

According to the Reserve Bank, banks are considered to be NPAs if any asset (s), ie loan ceases, is not available.

If the amount of money that the bank has lented, its principal or interest installment can not be recovered for 90 days, then the banks have to put that loan in NPA.

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Rules of reserve bank
The Reserve Bank has made rules to identify whether a loan account can become NPA in the near future. Under this, banks have to mark their loan accounts as Special Mention Account (SMA).

If the payment of principal or interest installment within a loan account is not within 30 days of the due date, then it is called SMA-0. If payment is not in the range of 31 to 60 days then it is called SMA-1. If the payment of principal or interest does not last for more than 61 days then it is called SMA-23.

After declaring a loan account as an NPA, the bank has to divide the NPA account into three categories – ‘All Standard Assets’, ‘Doubling Assets’ and ‘Los Assets’.

When a loan account is in the NPA category for one year or less, then it is called ‘sub standard assets’, for a year, it remains in the ‘All Standard Assets’ category, then it is called ‘Dowful Assets’. . When the bank assumes that the loan can not be recovered now, it is put in the category of ‘Los Assets’.

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The Reserve Bank is also worried about the rising NPA and has taken several steps in this regard.

Banking Expert Kajal Jain says, “The Reserve Bank had abolished almost half a dozen rules while stipulating the NPA rule in February, now it is mandatory for banks to get their solution settled within 180 days in case of any debt default. In case of non-occurrence, that account will have to be proceeded under the bankruptcy process. ”

According to Kajal, “In the case of loan default of Rs 2,000 crore or more, under the new rule, bank officials will have to prepare a plan for provisioning within 180 days, and if it does not happen, then they will have to take it into the bankruptcy process.”

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Deficit with rule effect
So what is the loss of thousands of rupees in the quarterly results of government banks due to this rule?

Economist Sunil Sinha says, “To a lesser extent it is true that the cases of default in the banks are increasing. But now banks have been given only six months for its provisioning, hence the banks should be given these NPA as a deficit It does not mean that this loan has been squeezed and now it will not be recovered. ”

But knowledgeable banking analysts also believe that there is a flaw in the process of giving loans to banks and it should be corrected.

An example of this is the Reserve Bank’s action on Dena Bank On May 7, 2018, the Reserve Bank directed the Dena Bank not to divulge any new loan nor recruit any employee till further instructions. The bank has given this information to the Bombay Stock Exchange.

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