InvestorQ : Is it true that the NPAs of the banks in India have reduce during the current year?
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Is it true that the NPAs of the banks in India have reduce during the current year?

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sarah Leo answered.
2 months ago
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The NPAs have fallen in the current year and they have fallen drastically. That is what was disclosed during question hour in the Rajya Sabha by the Minister of State for Finance, Anurag Thakur. He confirmed that the non-performing assets or NPAs of banks had fallen to Rs.5.70 trillion in December 2020. Thakur also underlined that nearly Rs.2.74 trillion was recovered due to measures taken by the government to ensure better compliance.

Thakur underlined that the Insolvency and Bankruptcy Code or the IBC had also helped significantly in reduction of gross NPA levels of the banking system. In fact, the gross NPAs had reduced from Rs.8.96 trillion in the year 2018 to Rs.5.70 trillion in December 2020. Thakur also underscored that the tighter controls over the process had resulted in incidents of frauds falling from 1.01% in 2013-14 to 0.23% in the present day, which is a huge gain.

In this context, Thakur also underlined that digital initiatives were the key to reducing frauds and also the incidence of NPAs as better data sharing and a tighter evaluation process was already making a difference to the credit quality. He also stressed that 7 out of the 12 PSU banks in India had already taken up digital initiatives on a war footing and they hoped to be able to compete with private banks soon on a one-on-one basis.

There is one catch in the entire argument. The figure talked about here excludes the moratorium loans and the real picture of NPAs may only be clear after that. During the pandemic, the government had allowed companies who had borrowed to delay repayments in the event of stress. They also had an assurance that it would not impact their credit score. While banks are providing for the same, the full picture will be known after moratorium.

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