Lok Sabha Question No. 4132 (UNSTARRED), answered on 2018-08-10
Subject: Asset Quality Review of Banks
Ministry: FINANCE
Asked by: RAM CHARITRA

## GOVERNMENT  OF INDIA

## MINISTRY  OF FINANCE DEPARTMENT  OF FINANCIAL SERVICES

LOK SABHA UNSTARRED  QUESTION  NO: 4132 TO BE ANSWERED  ON THE 10 th  AUGUST,  2018/SHRAVANA 19, 1940 (SAKA)

## QUESTION ASSET QUALITY  REVIEW OF BANKS

## 4132:  SHRI RAM  CHARITRA  NISHAD:

Will  the Minister  of FINANCE  be pleased to state:

- (a) whether  the Reserve  Bank's  Asset Quality  Review  has led to the recognition  of a huge pile of non performing  assets  hidden   on  bank   books   which   is  worth   over  40  per  cent  of  the  system wide   bad loans;
- (c) whether  the banking  system in the country  is now  poised for a better  future  and support  the credit needs of the economy;  and

## ANSWER

## THE MINISTER  OF STATE  IN THE  MINISTRY  OF FINANCE (SHRI SHIV PRATAP  SHUKLA)

## To be answered by

(a) and (b): Gross advances of Scheduled  Commercial Banks (SCBs) increased  from  Rs. 25,03,431  crore  as on 31.3.2008  to Rs. 68,75,748  crore  as on 31.3.2014,  as per the global  operations  data of the Reserve  Bank of India (RBI). As per RBI inputs,  the primary  reasons for spurt  in stressed assets have been observed  to be, inter-alia, due to aggressive  lending  practices,  wilful  default  / loan  frauds / corruption  in some cases, and  economic   slowdown.   Asset  Quality Review   (AQR)   was  carried   out  in  2015,  with   reference   to  the position  as on 31.3.2015,  for clean and fully  provisioned  bank  balance-sheets.  It revealed  high  incidence  of Non-Performing   Assets  (NPAs).   Stressed  loans,   not  provided   for  earlier   under  flexibility given  to restructured   loans,   were   reclassified   as  NPAs   and  provided   for.  Public   Sector   Banks   (PSBs)  initiated cleaning  up by  recognising  NPAs  and provided  for expected  losses. Further,  during  the financial  year  (FY) 2017-18, all such schemes for restructuring stressed loans were  withdrawn. The aggregate gross NPAs  of SCBs increased  primarily as a result of this transparent  recognition  of stressed assets as NPAs,  from  Rs. 3,23,464 crore,  as on 31.3.2015,  to Rs. 10,35,528  crore,  as on 31.3.2018  (provisional  data),  as per RBI data on global  operations.  As per RBI, part  of this  increase  is attributable to AQR.

(c) and (d): Banking  system  in the country  is positioned  strongly  in terms  of their  deposit  base, diversified credit  growth,  healthy  and improving  net interest  margin,  and substantial  capital  base. As per RBI data,  as on 20.7.2018,  SCBs had aggregate  deposits of Rs. 114.38 lakh  crore,  which  was 32.8% more  than  their aggregate   credit,   reflecting   customer   confidence   and  a  strong   fund  base.  This   is  being   deployed   for diversified   credit   growth   of  12.4%  year-on-year   (as  on  20.7.2018),   which   will   help   further   improve   net interest  margin  from  the existing  healthy  level  of 2.7% (as of March  2018). Further,  as per RBI data,  SCBs had a capital  to risk-weighted  asset ratio  of 13.8% as of March 2018, as against  the regulatory norm  of 10.875%.

- (b) if so, the details  thereof;
- (d) if so, the details  thereof?