How NPA Of Banks Increased Over Last Five Years

NPA (Non Performing Assets) of Indian Banks has risen significantly in past five years. In December 2016, Gross NPA of public banks remained Rs 6.46 lakh crore rupees.

Reserve Bank of India (RBI) defines NPA as an asset when it ceases to generate income for the bank. Banks classify an account as NPA if the interest due and charged on that account during a quarter is not serviced fully within 90 days from the end of the quarter.

Higher the NPA, the more loss a bank will face.

Gross NPA of public banks during last five years

For public banks, Punjab National Bank has the highest share of bad loans in their advances. State Bank of India, Canara Bank, Oriental Bank of Commerce and Bank of Baroda has less percentage of gross NPA.

Experts claim that NPA of public banks is on the rise because banks are recognising loans as bad loans at a slower pace. To reduce the percentage of NPAs, banks have to identify the bad loans properly.

Gross NPA percentage of public bank during last five years

NPA percentage is the total share of bad loans from total advances. NPA of Punjab National Bank has seen a huge rise in the past five years from 2.96 percent of bad loans in 2012 to 13.53 percent in 2016.

Gross NPA of private banks during last five years

For private banks, Yes Bank is the best performer followed by HDFC Bank, Axis Bank, Kotak Mahindra Bank and ICICI Bank. While public banks face a rapid rise in their NPAs, private banks have been able to counter the bad loans and stayed stable.

Gross NPA percentage of private banks during last five years

NPAs of Yes Bank and HDFC Bank have remained stable during the last five years whereas ICICI Bank and Axis Bank have seen a significant rise in the share of their bad loans.

In order to decrease the rapidly rising NPAs, the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act 2002 was enacted by the government. This act gives authority to financial institutions to auction properties (residential/commercial) to recover from the bad loans. However RBI needs to propose more solutions to put a hold on the rising NPA.

Bhragu Haritas

BW Reporters Bhragu Haritas writes on Gadgets and Tech