India’s bad loans saga continues

bad loans

India’s largest lender, State Bank of India (SBI), has reported its biggest-ever quarterly loss of Rs. 7,718 crore for the quarter ended March 31. It had reported a quarterly loss of Rs. 3,442 crore a year ago. This is SBI’s second straight quarterly loss as the bank set aside more money to cover bad loans and losses on its bond portfolio.

On May 15, Punjab National Bank (PNB), being hit by $2 billion scam, reported the highest ever quarterly loss by an Indian bank—Rs13,417 crore in the January-March period.

Apart from this, the non-performing assets (NPAs) of 26 banks have piled up to Rs. 7.31 lakh crore. This is a rise of Rs 2.5 lakh crore this year compared to March 2017. The total provisions during the year (of which the most would be for NPAs) increased to Rs 105,150 crore from Rs 43,611 crore, an increase of 141 percent, CARE Ratings said in a report.

Gross NPAs has risen to its peak at 10.14 percent in March 2018.

Also read: Modi’s job creation nightmare

One of the reasons for growing NPAs is the loans sanctioned by the government under the Mudra scheme. Loans from the Mudra scheme are provided by banks without collateral. Considering nonperforming assets have already reached Rs. 9 lakh crore, defaulters on these loans could add to this substantially.

Instead of boosting up sources which generate income for banks, this government has done everything to put banks in a bad shape. BJP’s love for its capitalist friends, no check on corruption, bad policies and many other such things has reduced India’s banking system into tatters.

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