Lok Sabha Question No. 993 (UNSTARRED), answered on 2017-07-21
Subject: Loan Growth of Banks
Ministry: FINANCE
Asked by: GOWDAR MALLIKARJUNAPPA SIDDESHWARA

## GOVERNMENT OF INDIA MINISTRY OF FINANCE

## DEPARTMENT OF FINANCIAL SERVICES

## LOK SABHA UNSTARRED QUESTION NO.993

TO BE ANSWERED ON THE 21 ST  July 2017/ Ashadha 30, 1939 (SAKA)

## Loan Growth of Banks

## 993.   SHRI G.M. SIDDESHWARA:

Will the Minister of FINANCE be pleased to state:

- (a) whether the loan growth of major commercial banks of the country has declined over years;
- (b) if so, the details thereof, bank-wise;
- (c) the factors responsible for low growth of loans of these banks; and
- (d) the steps taken by the Government to make this loan growth, a positive one?

## ANSWER

The Minister of State in the Ministry of Finance (SHRI SANTOSH KUMAR GANGWAR)

(a) & (b): The details on Outstanding Gross Loans & Advances as reported by Scheduled Commercial Banks (SCBs)  to Reserve Bank of India (RBI) are as under:-

| Bank Group                 | 31 Mar-15   | 31 Mar-16   | 31 Mar-17 (Prov.)   |
|----------------------------|-------------|-------------|---------------------|
| Public Sector Banks (PSBs) | 56,15,793   | 58,23,907   | 58,74,849           |
| Private Sector Banks       | 16,07,329   | 19,72,608   | 22,66,721           |
| Foreign Banks              | 3,36,638    | 3,76,607    | 3,43,986            |
| SCBs                       | 75,59,760   | 81,73,122   | 84,85,556           |

(c) & (d):  RBI has informed that PSBs accounted for approximately 69% of total loans and advances by all SCBs and  moderate growth for loan portfolio of PSBs was the main reason behind low credit growth at the system level. Public Sector Banks as a group has witnessed significant impairment in certain  key  industry  sectors  (having  large  exposures  for  PSBs)  such  as  'infrastructure',  'steel', 'textiles, etc. In wake of the higher impairment in such industry sectors, PSBs are trying to re-balance their loan portfolio.

The Government and RBI has taken various initiatives to improve the asset quality of banks:-

With the enactment of 'Insolvency and Bankruptcy Code (IBC)', 2016 the recovery environment is expected to improve leading to improvement in asset quality of banks. An ordinance to amend section 35A  of  the  Banking  Regulation  Act,  1949  was  recently  promulgated  in  May-17  enabling  RBI  for directing banks to resolve specific stressed assets by initiating insolvency resolution process (where required).

RBI  has  given  elaborate  regulatory  guidelines  for  management  of  asset  quality  in  banks.  A framework of Prompt Corrective Action (PCA) is also used to monitor bank's position so as to take appropriate supervisory action and the same has been revised during April-17. RBI has issued Income Recognition  and  Asset  Classification  (IRAC)  norms  to  classify  and  recognize  non-performing loans. RBI has provided the Indian Banking System with numerous tools to tackle stress in their asset portfolio. These tools include Scheme for Sustainable Structuring of Stressed Assets (S4A), Strategic Debt Restructuring Scheme (SDR), Flexible Structuring for long term project loans to Infrastructure and Core industries (5/25 Scheme), Formation of Joint Lenders' Forum (JLF) for revitalizing stressed assets in the system and Corporate Debt Restructuring (CDR) Scheme.