DAILY NEWS ANALYSIS
27 December, 2019
Min Read
Syllabus subtopic: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.
Prelims and Mains focus: about the problem of NPAs in the banking sector; types of NPAs; loan write off and waiver
News: Indian banks have been facing a tough time getting back their monies from recalcitrant borrowers for long now. But their biggest hurdle in getting back dues is time. As time stretched, bad loans have only got worse and banks have had to keep increasing their provisions at the cost of profits.
Background
The following chart shows the surge in various types of bad loans.
Types of NPAs
How are banks dealing with the Bad loan situation?
Way ahead
The enabling conditions for a bad loan to become standard are absent. The economy is in protracted slowdown and several stressed sectors are yet to emerge out of their problems. Even as fresh stress has been piling onto bank balance sheets, past pain is only getting intense and this does not augur well for future recoveries.
What is a loan write-off and how is it different from loan waiver?.
Source: mint
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